Miller on Scrap: Trump tariffs seen having little impact on June market

SMU spoke with a trader in the Ohio Valley about the increased tariffs and their possible effect on the ferrous scrap trade.

He said the market for June and on into the summer months does not look very promising. He views the June pricing as “soft sideways” as activity seems to be slowing.

Regarding the increased steel tariffs, he said, “They won’t have any effect on the June market.” 

Over the longer term, they may help the scrap industry if it stimulates steel production. But he also cautioned that if economic activity continues to slide, the increased tariffs may not help.     

Another industry executive in the Midwest indicated to SMU he thinks the June market will be down $0-20 per gross ton (gt).

There is reportedly an outage at a Texas mill and the Canadian mills are slowing. So, both Canada and Mexico have surplus tons available for shipment to the US. If tariffs are increased, it may mean even more scrap will enter the US from both borders.

A mill source in the Great Lakes region told SMU he expects prices for June to be slightly weaker, indicating shredded would be the most susceptible grade in the region.

An executive at a large scrap concern in Canada who regularly exports scrap to the US to get his take on the increased tariffs responded to a request for comment.

He said the effect on the scrap market will be just psychological for June. Prices may have dropped somewhat for June in US, but this news may be enough to hold things sideways.

After June, prices could increase, but only if the raised tariffs translate into more steel production in the US.

In the Southern US, the feeling is the June scrap market should remain sideways.

SMU spoke with a large supplier who indicated most mills and dealers have agreed to sideways pricing.

He noted the large drop in scrap prices in May have decreased the flows of material into yards.

This month, there are two new market entrants scrap as Hybar and AM Calvert are starting to ramp up.

Regarding the tariffs increase, he does not feel it will have any effect as scrap prices have decoupled from HRC.

“Most EAF mills producing HRC are now running at 100%,” he added.  So, the rise in tariffs could possibly only impact long product mills.