Scrap market participants predict early settle at sideways or lower numbers

A mill source in the Central region told SMU that shredded scrap and HMS seemed to be weaker based upon ample supply. Plate and structural (P&S) should hold sideways based on less demolition. And prime grades should hold sideways as well. “Pig iron prices keep a lid on it. But reduced availability from July keep it from falling,” he said.

A trading source in the Great Lakes area agreed that both busheling and P&S should trade sideways. But he said there is modest weakness in shredded and HMS. Still, he doesn’t think prices can fall more than $10 per gross ton (gt) without a possible supply disruption.

The Great Lakes source said his mill customers are concerned about the scrap supply going into the fall and winter based on a projected strong order book throughout H2. He thinks mills should be wary of continually beating down scrap prices when the current economics are so much in their favor. But, he lamented, “It probably won’t stop them.”

A dealer source in the Pittsburgh area thinks “mills in this district will finally get what they want.” Some grades will go down because shredders have been dropping prices on shredder feed and because yards in the area have cut prices on other obsolescent grades. “That’s a tough pill to swallow with finished (steel) continuing to go up along with fuel and overhead,” he said.

Heading to the Southern region, SMU spoke with a scrap executive who forecast a $10/gt drop in shredded and HMS, with busheling sideways. He said most mills in the Southeast will have increased scrap programs for August. However, aside from P&S, there seems to be adequate supply of secondary grades, especially shredded. Why? He chalked it up to weak export prices for both bulk and containerized material as well as increased summertime flows. 

Another source said one mill in the Southern region has already finalized its prices for August at a $10/gt drop across the board, except for prime grades – which they don’t often buy. This mill did not drop prices in July even as other mills in the area did.

Back up north to the Chicago and Midwestern districts, SMU spoke to an industry veteran who sees things roughly the same as our other sources. But he insists shredded could take a $20/gt hit. He thinks the lack of buying via barge by a large consumer on the Lower Mississippi might be causing shredded and perhaps busheling to back up in the Chicago area. Steel mills in the region are being offered additional scrap this month, which may open the door for a sharper drop for shredded. He noted P&S is scarce and may not drop in price.

Most of our sources think scrap settlements will be completed yet this week.