Scrap Prices Drop in August, With Bush Near Shred Is Bottom Near?

SMU’s scrap price ranges for August are as follows: Busheling at $410–460 per ton, averaging $435. Shred at $415–435 per ton, averaging $425. HMS at $300–340 per ton, averaging $320.

Sources report that slowing shredder feed flows propped up secondary prices, resulting in a lesser decline in obsolete grades compared to prime scrap.

One Northeast scrap executive commented, “The cheaper prime grade situation basically reflects dealers’ desire to keep moving material on fixed spreads based on the index price and not disrupt transportation arrangements that were hard to put into place. But mills should be valuing busheling more than shred because of its yield in their furnaces.”

Busheling scrap is expected to regain its price premium over shredded in the coming months. But one scrap exec said this probably won’t happen until shredded scrap flows improve. “Busheling will always sell at higher prices than shredded, except in a market where there is a declining flow of obsolescent scrap,” he said.  Another commented, “It’s inevitable that they [bush and shred prices] will separate. Prime is too undervalued when it’s discounted to shred like this.”

“Many believe this is the bottom as dealers will start stockpiling for the fall over the next month,” said another source.

Regarding conditions outside of the US, sources report that scrap export pricing has firmed after bouncing around for the last few weeks. Turkish shredded prices are reported at $400 per ton delivered, a lower spread to domestic prices than in previous months. One broker commented: “The main weakness we continue to see is in Asia, as Chinese real estate and Covid lockdowns are holding things there back.”

We will report on preliminary September scrap figures around the last week of this month.

PSA: You can chart out scrap prices as far back as 2007 using SMU’s interactive pricing tool.

By Brett Linton, Brett@SteelMarketUpdate.com