November Scrap Prices Forecast to Drop by $20

As one of our scrap sources out on the East Coast put it on Friday, talk within scrap circles is very negative for November and the market is poised for another move lower.

“Domestic demand for November scrap seems lackluster and export demand at this point – I think everyone knows the story there – is terrible. There is a bottom at some point – and November may be it – but I have no good news for the immediate future,” is what we heard from one east coast source.

Earlier this month, dealers were talking about prices for November as potentially being sideways to down $10 per gross ton. Now the expectations are for prices to drop at least $20 and, in some regions and on some products, the decline could be greater than $20.

The strength of the U.S. dollar is affecting both price and the amount of scrap being exported to Turkey and other foreign buyers.

Mike Marley, scrap guru for MetalPrices.com, reported in his Friday report weaker demand at the domestic steel mills could result in a drop in scrap buys. He reported, “Weaker domestic steel demand could play a larger role in the scrap market in the coming weeks. Several mill buyers said they are already seeing a decline in incoming steel orders. Some declines are expected at this time of the year, said one buyer in the Midwest. Steel users typically reduce their buys in the fourth quarter. But the drop in scrap prices this month and the speculation that they fall by the same amount or more in November could persuade steel buyers to postpone purchases.”

We will know more as we move into the November negotiations next week.