Final Thoughts

Final Thoughts: Summer supply crunch has ferrous sentiment faltering as non-ferrous copper soars

Written by Gabriella Vagnini & Stephen Miller


Last week, steelmakers entered the scrap market at mixed pricing. The prevailing price for obsolescent grades fell $20/gt, however some notable districts decided to only drop $10/gt.

The primes grades traded sideways in all districts, further widening the premium over shredded. At this early point, it’s a hard call to predict what June prices will do. However, the sentiment is looking slightly weaker as steelmakers are announcing summer outages and HRC prices continue to fall.

Opinions do vary, however.

A source in the Chicago district said, the feeling is the market may have bottomed, but “there’s no room for it to go up.” This may be because of the numerous outages among the steel industry. This may trump any slowdowns in scrap flows.

Another source commented that even though shredder feed is becoming more competitive to obtain at prices which allow a reasonable profit, the prospect of lower scrap demand this summer should keep prices in check. He also said that if the steelmakers try to take down the market sharply, shredder feed could dry up. This would probably force prices up given the reliance on shredded scrap among EAF consumers.

There is concern among steelmakers about demand for HRC. Prices do not look to have bottomed yet according to an attendee at the AISI meeting in Washington, DC. Referring to scrap, he said, “Demand may not pick up quickly enough to prevent a lower market next month.”

There are other considerations in the ferrous equation to address. They include a firm export market, at least for now, and recent higher asking prices for pig iron. But in the end, demand for scrap in North America will be the deciding factor.


The recent turmoil in the copper market, sparked by a Swiss trading house closing their exposure over July-Sep, has sent shockwaves through the global trading community.

With prices rallying in both Comex and the LME, traders and brokers holding short positions are facing significant losses as they unwind their positions.

The market’s unprecedented volatility – with prices fluctuating from a rally hitting around $10,200/mt – has left traders reeling leaving June and July liquid. Backwardation between Jul/Sep contracts reaching 20-30 points signals a tightening of supply, amplifying the chaos.

Despite the uncertainty, investors remain bullish on copper due to its vital role in key sectors, suggesting a promising outlook despite the current chaos.

So, what does this all mean for the recycled copper community? Well, since it’s been a seller’s market and recycled copper is in a supply shortage, the advantage to profit off the rally are far and few. On the other hand, the recycled copper buyers, as mentioned by Gabriella Vagnini in her recent article, A painful day for the copper market, have taken quite a hit, both on the arb for exports and on the spreads that weren’t priced.

The LME’s investigation into late trades executed at market close has added to the confusion, raising questions about price discovery and market integrity. As the market grapples with these challenges, time will tell how the situation unfolds in the days ahead. Stay tuned for further details supplied by RMU’s insightful, in-the-know experts. We will keep you updated accordingly.

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