Ferrous Scrap

Summer supply crunch has scrap sentiment faltering

Written by Stephen Miller

May 17, 2024

Earlier this month, steelmakers entered the scrap market at mixed pricing. The prevailing price for obsolescent grades fell $20 per gross ton (gt). However, some notable districts decided to only drop $10/gt.

The primes grades traded sideways in all districts, further widening the premium over shredded. At this early point, it’s a hard call to predict what June prices will do. Still, the sentiment is looking slightly weaker as steelmakers are announcing summer outages and hot-rolled coil (HRC) prices continue to fall.

Opinions do vary, however.

A source in the Chicago district said, the feeling is the market may have bottomed, but “there’s no room for it to go up.” This may be because of the numerous outages among the steel industry. This may trump any slowdowns in scrap flows.

Another source commented that even though shredder feed is becoming more competitive to obtain at prices that allow a reasonable profit, the prospect of lower scrap demand this summer should keep prices in check. He also said that if the steelmakers try to take down the market sharply, shredder feed could dry up. This would probably force prices up given the reliance on shredded scrap among EAF consumers.

There are other considerations in the ferrous equation to address. They include a firm export market, at least for now, and recent higher asking prices for pig iron. But in the end, demand for scrap in North America will be the deciding factor.

Stephen Miller

Stephen Miller started his career in the scrap metal industry in 1978 at Luria Brothers in Cleveland. Over the last 40+ years, he has worked in all capacities in the trading business. He has had positions in both domestic and international scrap trading. In addition to scrap, Miller was at the forefront of the pig iron trade and established a pig iron distribution company under the name of Ferrosource, Inc. Most recently, Miller has concentrated on the scrap export market and regularly does consulting for several companies in the industry.

Read more from Stephen Miller

Latest in Ferrous Scrap