Ferrous Scrap Prices Expected to Decline in February

Scrap prices in the U.S. will not get much support from the export market in February, either, said McKinley. The latest deal to Turkey was done at the $277/t CFR level for HMS 80:20 originating from the UK. For reference, around this time last month prices for HMS were at or above $300/t CFR.

“February markets are typically lower than January, and export prices are falling, so that points to a down February market this time, too,” agreed a dealer in the Northeast. “But we also think U.S. domestic scrap demand will remain strong next month, so any drop should not be large.” The American Iron and Steel Institute reported that U.S. mills operated at nearly 83 percent of capacity last week. 

Commented another scrap executive: “I expect scrap prices to be off $15-20/GT in February as export prices are dropping with further decreases likely. Inbound scrap flows have been strong due to two major factors—weather has been relatively mild and suppliers are shipping as much as possible, feeling that January is peak pricing.”  

Finished steel prices are falling, giving even more incentive to mills to drop raw material costs, he added. The benchmark price for hot rolled steel declined by about $20 last week, to an average of $590 per ton, according to the latest canvass of the market by Steel Market Update.

Ferrous scrap prices saw increases in November, December and January totaling nearly $80 per ton, taking the price per ton of shredded scrap over $300.

Pig Iron Market

The pig iron market in the U.S. has peaked at $350/MT CFR. Attempts to sell over this level have failed and $345 looks like a fair deal for producers, reported another SMU source. “China has been the wild card as they continue to buy mainly from southern Brazil. This has put a floor on pig iron prices across the globe. Supply could be an issue in the future.”