April Scrap Prices Forecast to Move Higher – Steel Prices to Follow?

Written by John Packard

Early indications are for April ferrous scrap prices in the Midwest to rise once we enter the next round of steel mill negotiations with their scrap suppliers. Steel Market Update (SMU) scrap sources are pegging the potential increase at $10 to $15 per gross ton. Other industry sources have it as moving even higher.

Scrap Guru Mike Marley of Metal Prices penned an article to his customers late last week pointing to low inventories at many steel mills as potentially being one culprit which raises prices from here. “Nobody is mentioning the dreaded ‘s’ word (shortage) yet, but several dealers said they are feeling the pressure. Some mills may be down to only a week or less of inventory of obsolete material like heavy milt, and they want assurances that needed supplies will arrive soon. Buyers and brokers often call dealers and ask for the delivery dates on scrap orders, but that is usually in the last week of the month when mill inventories have dwindled. Receiving calls this early is an indication that some may be desperate for scrap.”

Mr. Marley went on to advise that there is a shortage of railcars on the CSXT and Norfolk Southern which control the main railroad tracks in the eastern half of the United States.

There are also lower inventories in the scrap yards as a combination of cold and snow have impacted flows into the yards and some dealers did not buy enough scrap having under estimated the demand for scrap during March.

We are also learning that offers of scrap off the East Coast are becoming fewer and fewer. The Turkish steel mills appear to have returned to the market and East Coast offers for export have risen over the past week. Exactly how much scrap will be exported to Turkey in the coming days is not yet known.

Metals and Mining Analyst, Timna Tanners, was forecasting a tightening scrap market which in turn would assist flat rolled steel mills in their efforts to raise steel prices. Her sources had ferrous scrap prices rising by $15-$25 per gross ton in April.

SMU will continue to watch this important subject as we move into the April negotiations.

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