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.
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, as scrap flows are declining and may not increase until spring.
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 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 indicated that if they decide to liquidate this winter, the market could fall after January.
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 the weather enough, adding, “They should look out the window!”
It is unclear when the mills will enter the market, but most sources feel they won’t wait too long.
