October scrap market settles with bush down $20, shred down $10

Most mills sought a drop of $20-40 per gross ton (gt) in busheling prices and a $20/gt dip for shredded and HMS. Despite efforts to buy cheaper, the busheling price settled at down only $20/gt. The trade did not contest down $20/gt because there seemed to be more busheling available given flat demand.

The biggest point of contention was the proposed lowering of shredded and #1 HMS. Many dealers did not want to sell at down money. Mills countered that they were justified in dropping shredded by at least $10/gt to keep a positive spread between busheling and shredded prices.

Recall that busheling fell $20/gt in September while shredded traded sideways. Busheling now holds as little as a $10/gt premium over shredded (which is technically a #2 grade of scrap).

As negotiations wore on, dealers accepted down $10/gt for shredded. But they were relieved that #1 HMS and other grades traded sideways.

There are a handful of mills that managed to buy P&S at down $10/gt. And some are still trying to do so. However, trading is essentially a “fait accompli.”

What remains unclear is whether dealers have sold their normal complement of scrap tonnage. They may have held back a bit as we approach the slower winter months.

October is usually a weak month for scrap. But this year, with the scrap market trading sideways on obsolescent grades for five consecutive months, it was difficult to justify a major decline. 

And several sources told SMU they think the US scrap market has bottomed.