June scrap market appears 'soft sideways,' pig iron down

Great Lakes/Midwest

SMU contacted a purchasing manager in the Great Lakes region to learn how steelmakers are viewing the month ahead.

“We are still in a supply-driven market. Export ticking up helps, but not sure enough material is moving just yet,” he said.

The source noted the summer doldrums are upon us and it is not a great season for steel or scrap.

He added: “I think we are trading along the bottom for the next few months, unless demand picks up or supply gets short.”

What he seems to be referring to is will renewed export activity affect the scrap flows from the coastal exporters to cause domestic supplies to dwindle? Right now, it does not seem to be a problem.

Will scrap flows decrease in the summer months enough to limit supply? This does not seem very likely, either.

Another source in the Midwest area said he sees things as “soft sideways” for June. This corresponds with what we heard from an Ohio-based broker who said another national broker has signaled a June sideways market.   

Pig Iron

There has been some activity for pig iron over the weekend. In Brazil, two cargoes from the southern region were sold.

The Brazilian producers were reluctant to offer prices lower despite the drop in scrap prices in the US.

However, given the sharp declines in scrap and the added tariffs, they fell under pressure from US buyers. This resulted in a cargo sold at just under $450 per metric ton (mt) CFR, which was followed by another at $440/mt CFR. These prices represent a $30-35 mt drop since the last cargoes traded in early April.

As reported in SMU last week, this still leaves a wide gap between the cost of pig iron and #1 Busheling. US mills still will need to buy more.