Product
June 20, 2024
Quiet currents and mixed signals in ferrous scrap
Written by Stephen Miller
The US scrap market is quiet as we pass through June. Speculation about the direction of July is mixed, with most sentiment neutral or bearish.
The concerns are about demand during the summer months. There are still several planned outages and other cutbacks at various mills that could limit overall demand for recycled steel scrap.
Some scrap processing facilities are reporting a slower flow of obsolete scrap into their yards. But given the lack of demand, especially in the Great Lakes region, the lack of supply is not expected to cause any bullish reaction in the market.
RMU reached out to a scrap processor in the Midwest to see how they view the state of things. He said inbound shredded feed was off marginally. Scrap yard inventories are also very low. He said, for example, that after his company shipped a multiple-carload order of shredded scrap, they had just “a half of carload on the ground.” This is a unusual, but it points to the fact flows are decreasing.
The sentiment views are that, over the summer, the scrap market should trade basically sideways with possibly some weakness. That is until demand at the mills improves. What might be the catalyst to turn the market around? It could be that mills come back to the market at the same time at the end of summer. That has happened before, and it would drive prices up.
On the export front, meanwhile, the decline of scrap prices in North America has not yet affected export prices off the East Coast. In fact, the prices have risen into the mid-$380s on recent sales to Turkey after the June downward settlements. Prices in the EU have also advanced during this period.
Usually, when domestic prices fall to the extent they did in June, export prices follow. This has not happened thus far.
