Miller on Scrap: May prices seen poised for a decline

What is meant by this is the US and Canadian markets do not have any support from other markets or ferrous commodities. 

The export markets, both East and West coasts, are very inactive. Ferrous scrap in Northern Europe has cratered, perhaps reaching a bottom.

Meanwhile the Turkish buyers have paused ordering. They will need more scrap despite their growing appetite for billets from the Far East and CIS. As one exporter put it, “They are waiting for the ball to drop in the US.”

It looks like the same scenario is happening with pig iron. Since the tariffs were applied, there has been only one cargo transacted of which SMU is aware. That happened almost two weeks ago.

In checking with Brazilian pig iron sellers, they are saying the market is quiet. The US buyers may be waiting for May scrap settlements before moving forward with new pig iron purchases.

Steel prices are not as firm as they were in Q1. Mills are reportedly more willing to negotiate on price.  So, there will be no tailwind there for scrap prices.

SMU has contacted scrap players in several regions of the Eastern US. They are in general agreement. The most severe drop in prices for May will be for shredded scrap. The prediction is $40 per gross ton (gt).

Other obsolescent grades may fare better, but not by much. Most agreed the prime grades of #1 Busheling and Bundles should not decline as much. Prices should not drop more than $20/gt, they are saying. If this holds true, this will essentially be a repeat of the April market. 

Considering the lack of support from all the other segments of the ferrous communities, the US domestic  price decline may be underestimated. There seems to be more than ample supply and nobody is taking any prisoners.