Ferrous scrap prices poised for sharp declines in April

The basics of this ferrous scrap markets are this:

• 1. Increased scrap supply as spring cleanup is underway
• 2. Ferrous scrap prices peaked in March
• 3. Export market demand is shaky
• 4. Steel markets are better than last year, but not great

SMU reached out to a raw materials procurement officer. He offered the following assessment:

“With tariffs not covering (Canadian) scrap, that leaves us with even more of an overhang. The domestic US market has outpaced export prices to Turkey, significantly over the past few months, due to the supply-driven market we were in,” he said.

“With increased flows, tons from the East Coast turning inland, and scrap freely moving across the border, there is a significant overhang of material. I expect to see primes and cuts come off $30, with the shredded being the biggest dog and coming off $40-50,” he added.

This sentiment was also echoed in several regions from the Midwest to the Southeast. Sources there are expecting a drop of $40-50 per gross ton (gt) in scrap prices across the board.

One Midwest dealer said the mills would play hardball on prices now that Canadian scrap will continue to be available for April shipment. In the South, one major buyer has sent their suppliers a letter stating their intent to decrease scrap prices by $40-50 gt.

There have not been any official settlements by other major buyers. But the general expectations are for price drops of at least this much, and probably more.