Analysis
January 2, 2026
Winter weather a factor as scrap market debates January pricing
Written by Stephen Miller
As the new year begins, steelmakers in the US are optimistic about their prospects in 2026. They feel Section 232 tariffs will start to work for them. Prices for both long and flat products have been raised. So, the mills have gotten their price. What does this mean for their primary raw material, ferrous scrap?
It may be safe to say the scrap industry has seen scant benefits from the 232 tariffs on steel imports, either 25% or 50%. Over the last three years, prices for ferrous scrap have risen briefly during the winter months. Prices then began their yearlong descent into the late fourth quarter, before jumping sharply ($80-100 per gross ton) and then dying down as the process repeats.
However, this year, there is disagreement over whether prices will increase meaningfully going into January. Prices did see a small increase in December, but several sources SMU has contacted have told us they are hearing price rises may be limited compared to past years. But others are singing a different tune!
What is different going into 2026? It seems there should be several bullish factors for scrap optimism.
We contacted a mill source who thought prices could rise $30-40/gt. When we mentioned several sources had said price increases would be limited to $20/gt, he responded, ”$20 would be a steal for mills at this point.” He indicated the weather is likely to be a factor.
Another scrap industry veteran told SMU that shredded scrap in the Midwest and Central districts is in short supply, and a $20/gt increase may not be enough to attract enough tons. The weather in this region has been horrible so far this winter. Regarding prime grades, he said demand from integrated Chicago-area mills will not be up to par. Also, a large EAF mill in Arkansas may not source its usual tonnage from Chicago due to barge congestion. However, he forecasted Canada’s Algoma Steel would take up the slack in Chicago, as they will need material since their reliance on EAF steelmaking has now fully transitioned. SMU pointed out this eventuality in our Dec. 14 edition.
This same source did say the prime scrap market may be impacted by the reported existence of several large prime scrap inventories held by several North American dealers. He said he contacted several larger dealers in the US who have healthy inventories of prime scrap. They told him they are not sellers unless busheling is up $40/gt over December prices.
Another scrap trader in Pennsylvania thought the scrap market is due to rise by $30-50/gt, despite his area consumers adamantly predicting a maximum increase of $20/gt. He said they are not factoring in the weather enough, adding, “They should look out the window!”
A trader in Ohio told SMU some of his suppliers are offering 40-60% less scrap than their usual amounts despite the looming rise in the January market. They are telling him they just don’t have the tons.
It is unclear when the mills will enter the market, but most sources feel they won’t wait too long. History seems to be ready to repeat itself.
