Market
April 30, 2024
Final Thoughts: May market musings, steel scrap predictions and the future of supply
Written by Stephen Miller
As we approach “buy week,” a term industry veterans use to refer to steel mill scrap buying time and an excuse to remain in the office, we have seen a variety of slants on the May market.
The consensus for ferrous scrap is sideways, maybe not a strong sideways this month.
There were the usual cancellations by a couple of mills to even further cloud market sentiment. After listening and reading about everyone’s opinion, it doesn’t seem like these will be much variation in pricing either way. In the past, when scrap prices ranged $100-$150/gt a $20 move was considered big news. With prices elevated today into the $400-level, a $20 move is only a 5% change.
So, what is all the hoopla about?
There are predictions that export strengthening will affect certain markets; maybe coastal areas to a degree. Shredder feed will dry up if it falls from $200-$180 per net ton. Really? There won’t be enough scrap to feed new EAF expansion. Not so sure about that, or the investments probably would not be made. After all, the capacity which came online over the seven to 10 years has never run out of scrap yet, despite their location in traditional scrap short areas.
In the U.S., we are fortunate to have the most efficient steel scrap processing industry in the world. It is advanced technologically and the industry reinvests in itself to stay at the most efficient level. The innovations over the years have allowed steelmakers to greenfield or convert to electric furnaces using primarily a ferrous scrap charge, sometimes with a dash of pig iron.
I know the steelmakers are claiming they have done this to turn “green,” but that wasn’t the goal when the electric conversion started in the middle of the last century. It was because it was a cheaper way to make steel, and the scrap industry was up to the task of providing the materials to make this method successful.
So, here’s to the EAF steelmakers for their foresight and investment. But they could not have pulled it off without a world-class scrap industry waiting in the wings. I would not fret too much if there is enough steel scrap to supply the new capacity. In my opinion, there will be. We should rather fret about where all that steel is going to be placed. I think the steel industry will succeed in this.
