Final Thoughts

Final Thoughts: Bullish indicators for scrap

Written by Stephen Miller

May is already a week old, and we have yet to hear what the U.S. steel industry is going to pay for scrap this month.

May is usually a weak month for scrap since after winter ends. Quite frankly, there’s a lot of obsolescent scrap hitting the market. However, some in the scrap community are saying the flow is not as fluid as in the past.

If this is true, why take it down until the flow is negatively affected? I guess that is the way it has been done in the past. Get what you can, when you can. And I guess it is true on our end, as well.

But there are some bullish indicators out there.

During the last week, five major cargoes were sold to Turkey from the U.S. The prices were surprisingly firm. They all held at the equivalent level of $383/mt CFR for HMS 80/20. So, they didn’t really decrease in price from their last series of sales. The European cargoes have sold for just slightly less given their freight advantage.

In Brazil, pig iron prices did tick down a bit to $440/mt FOB from an asking price of $450/mt. This is not a strong indicator, but not very bearish. The next availability is now July shipment, which means mid-August/September upriver.

On a bearish note, HRC prices have been falling and have dipped into the high 700’s NT. As we all know, this is not a good sign for scrap prices. We always need a decent steel market to create demand for recycled metals.

There are quite a few factors to consider in formulating our opinions on where scrap prices will settle this summer. RMU will report on the events in the market once they happen.

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