Early Ferrous Scrap Indications are Down $5 to $22 per ton

Ferrous scrap price negotiations are beginning with at least one deal getting done in Detroit within the past few days at down $22 per gross ton. However, as one scrap dealer explained to us earlier today, scrap prices are all over the board. There are steel mills who are bringing furnaces back online and others who are taking them down. Geography makes a difference.

One east coast scrap dealer told us, “Prices are all over the place in June.  Flows are still elevated because of the season but they will eventually fall off over the course of the next month.  Export prices cif Turkey are steady, and more importantly at levels that are advantageous relative to shipping scrap domestically.

“But the further west you go the weaker the shred market will be – down $20+ in the Midwest and OH Valley but not down more than $10 in the east.  On the east coast and down south, there are some mills that are hand to mouth looking for scrap every day.  Primes and cut grades should not move much if at all.  Overall demand is pretty good and seemingly getting better.  So it’s very fluid – could change on any new news.”

Pig iron prices are reported to be in the $415-$418 per metric ton CFR NOLA (New Orleans).

It is SMU’s opinion that dropping scrap prices, along with a wide price spread between domestic and foreign steel offers, could pressure domestic flat rolled steel prices. With USS and ArcelorMittal each taking one furnace down beginning in June we might see a few week reprieve but pressure on pricing will be building as we move through the month of June (July/August lead times).