US scrap prices shot up in December and are expected to continue their rise in January, market sources told SMU.
“Dealers dug in, and export prices continued to rise through the December trade to push domestic US prices considerably higher than initially expected,” one source told SMU.
The first source commented that cut grades rose only about $30 per gross ton (gt) “as other grades for flat-rolled mills were in better demand.”
He said that prime increases, though, were generally $50-60 per gt in most areas, though there were deals for prime in the Midwest that caused the indexes to jump higher.
A second source noted that some dealers “naively” sold at up $50, not realizing the supply constraints for prime scrap.
“Going forward, if the mills want to buy anymore scrap for December, they’ll have to make up this difference, and then some,” he said.
As for what drove the hike, the second source cited the lack of supply of automotive industrial grades like busheling and #1 bundles due to the now concluded United Auto Workers strike, along with increased demand for those grades.
“Also, stockpiling for severe winter months to a lesser degree,” he added.
Looking ahead to the new year, he said, “Everybody knows prices will continue upward in January.”
The first source agreed, expecting that scrap prices will move higher next month.
“But I would not expect December-style increases as more tons will come to market in January albeit to feed likely better demand too,” he added.
A third source noted a lot of “drama” in December pricing. He said December was “certainly a very strong increase, with every expectation that January will be higher.”
December scrap settlement
SMU’s December scrap pricing stands at:
- Busheling at $480-520 per gross ton, averaging $500, up $85 from November.
- Shredded at $450-470 per gross ton, averaging $460, up $65 from November.
- HMS at $360-400 per gross ton, averaging $380, up $30 from November.
Ethan BernardRead more from Ethan Bernard
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