Uncertainty looms over November pricing as holidays and supply dynamics shape markets

As we approach the holiday months of 2024, the scrap trade is optimistic about an upbeat finish to the year. Usually, prices for scrap start to rebound with winter weather on the horizon. The October market saw modest price rises in most districts. The Great Lakes region saw the Chicago and Detroit districts keep prices sideways. RMU reached out to several regional players in the scrap industry to assess the sentiment for November pricing.

One source in the Chicago district was not very confident of any real strength in scrap, or for that matter, steel, going into next month. In general, obsolescent scrap flows are still good, so he doesn’t think supply is a problem. He is not sure if the Detroit and Chicago districts can get away with going sideways in November, but suspects that is what may happen. However, these flows could come to a screeching halt at some point in the month as dealers usually like to sell heavy in November and very light in December. The holidays will be upon us, as will deer hunting season, and this historically has affected scrap flows, which won’t pick up until January, weather permitting.

In the Southeast, sentiment is a bit better as demand for scrap seems to be back to somewhat normal levels. The outages and cutbacks should all be finished and most buyers want to buy scrap. That does not mean prices will rise. The recent hiccup in the export markets have probably taken this possibility off the Thanksgiving table.

Our source observed that the South is scrap short and has to buy material from other regions. This is especially true for prompt industrial grades like #1 Busheling. Mills in the South paid up $20/gt for scrap in October. He said it’s not likely they will have to go up again. Shredded scrap for export markets via container has gone down and demand has dwindled. The fact that the market in the Great Lakes area did not increase in October may allow the Southern mills to springboard material from that area without having to pay more than they did in October.

Neither of our sources in the North or the South were very sure about the direction of the market, saying it was perhaps too early to get a reliable reading. RMU will revisit this situation next week and report.