October scrap market still up for grabs

During this sideways trading period, hot-rolled coil (HRC) and plate prices have gradually eroded, but long products have found footing and have increased.

Some of the EAF-based HRC steelmakers have posited the increased steel tariffs may brighten their future outlook, but so far prices have not improved.

The increased tariffs have led to price jumps for rebar and other long products. Given these events, how are industry participants viewing the ferrous scrap market as we head into Q4?

Asking the market

SMU spoke with a scrap executive with multiple yards in North America about general market conditions.

He noted the recent price stabilization in the European export trade and the increase in bulk export prices from US origins. At first, he viewed the bearish activity in the export market during the first half of this month as deflating October scrap prices.

However, the latest activity has suggested a floor for obsolescent scrap grades may have been established.

He still would not be surprised if US domestic prices dipped in October, mainly on prime grades.  

SMU also spoke with a smaller independent broker in the Chicago district.

He said he has doubts about market weakness for October but admits most of the scuttlebutt on the street is “soft sideways,” with prime grades being the most vulnerable.

The broker questioned if steelmakers at this point in the seasonality of the market would actually benefit by dropping busheling prices, thereby reducing their scrap surcharges.

However, in reality, he acknowledged outages in October will bend the market to some degree. He said it’s up to the scrap dealers to “hold serve.” 

Upcoming meetings

There are several important industry meetings over the next week.

The International Rebar Producers and Exporters Association (IREPAS) meeting is being held in Munich, Germany, this weekend where many worldwide long product mills will attend along with a number of scrap exporters.

In Sao Paulo, Brazil, the International Iron Metallics Association (IIMA) will hold its fall meeting next week. This meeting is for the pig iron and direct-reduced iron/hot-briquetted iron (DRI/HBI) communities. News from these meetings could give us a hint about where the ferrous markets will trend.

CRU, SMU’s parent company, will be presenting, and SMU will also be in attendance at the IIMA.