How will scrap market handle fall outages?

SMU spoke with a steel mill source in the Central district about whether upcoming outages could affect scrap prices in the months ahead.

He said, “The market still feels like a soft sideways.”

The source added that during outages some mills may have to run stronger to make up for the missing tons. But it’s still a net loss of capacity. He expects to see some softness in September and October.

Another source in the Southeast does not think upcoming outages will soften scrap prices in the Southern districts.

He acknowledged there are several planned outages that have not been publicly announced in addition to the announced three-week shutdown at Gerdau in Texas during September. Nevertheless, he does not see prices dropping, since demand is quite stable.

Historically, the months of September and October are on the weak side for scrap pricing.

The supply starts to increase in September after industry vacations and retooling have concluded. The market starts to firm up going into November and December after supply ebbs with the onset of winter and the holidays. We will see if the same pattern holds this year.