Market
October 1, 2024
Navigating tough markets ahead
Written by Stephen Miller
In September, reporters from RMU attended several industry events, including the Recycled Materials Association’s Roundtables in Chicago, International Iron Metallics Association (IIMA) biannual meeting and LME Week in London.
The one common thread was a reluctance to commit to long-term deals due to insecurity about the future direction of the recycled metals and OBM markets. After all, there are quite a few issues to worry market participants. We have two wars underway in Ukraine and Israel. There is a dock workers’ strike in the U.S. There is a U.S. presidential election, the result of which could spread the use of blunt tariffs to unimaginable levels. And of course, there is the overproduction of steel in China. What’s a trader to do?
Our reporter at the Roundtables in Chicago noted participants were not eager to negotiate longer-term contracts or sell forward at current prices. Likewise, at the IIMA in Houston last week, there were no pig iron transactions reported by the Brazilian producers who attended. Usually, there are some deals announced shortly thereafter. However, there were reports of U.S. purchases of one to two cargoes of pig iron from India, even though they may not have attended the meeting.
All of these actions or inactions speak to the signs of trouble ahead. In truth, poor pricing of steel, scrap and other materials weigh on the trading psyche. It’s a difficult decision to commit to selling materials when the pricing seems too low and the prospects of improvement are questionable.
The U.S. scrap market for October could go down still. The best expectations are sideways. This whole year has disappointed the recycled metals community. After a similar year in 2023, we seem to be stuck in this same rut, i.e. higher prices in the winter and a long downward trend until the snow falls again. The only difference this year is that the mills felt it, too, with HRC prices falling and hovering largely below $700 /nt. The prospect of the dramatic increase in EAF expansion in the U.S. and Canada was thought to mean higher scrap prices. It seems to be off the table now as busheling prices have sought parity with shredded, despite its declining availability.
Given the way 2024 has gone, we have to wonder when the ferrous markets can get healthy again.
