Market

Ferrous Scrap Prices Bottomed in June – Sideways to Up $20 in July (maybe…)

Written by John Packard


Our ferrous scrap sources are advising Steel Market Update that June saw the bottom to scrap prices and July will see prices move sideways (no change) to as much as up $20 per gross ton. If scrap prices do indeed rise by as much as $20 per ton, this could be important for steel buyers as the domestic steel mills would become more inclined to dig their heals on flat rolled steel pricing.

One dealer provided SMU with the following color on the market, “We put in a firm bottom in June.  Some people are now saying the market will be higher by $10-$20/GT, others are saying sideways to up a little.  Export isn’t a big factor either way.  Domestic mill demand, which seems pretty solid, will drive the degree of any price increase.”

With the 4th of July holiday staring at both the buyers and sellers of scrap, the expectation is many of the deals will get done by the middle of next week.

At the moment, many dealers are selling their steel on a TBD (to be determined) basis. This allows both parties to know that they have firm commitments on scrap supply but the price is based on the settlement prices published by AMM or one of the other organizations which index scrap by product and regional market.

We heard from Mike Marley, steel guru for Metal Prices, earlier today who told us, “The big “IF” could come early next week. If some EAF mills buy a significant amount of scrap before the July 4th holiday, that could undermine the scrap market the following week. Small and mid-sized dealers who wait till after the holiday weekend and think they could get even higher prices could be left out. This could be one of those markets where the first sales are the best sales.”

Mr. Marley estimates that this could be a “short-lived rally.” He told us that Nucor is short material (scrap) because of the outage at their new DRI facility in Louisiana. The DRI plant is scheduled to restart next week but it is not yet known how soon it will impact their appetite for scrap.

He also advised us that the Turkish steel mills bought one lone cargo of scrap off the east coast this week. He said, “The price was up a mere $1 per tonne. Just one cargo and not much of a price gain.”

We are hearing from other sources that there is plenty of shredded scrap in the Detroit market and that it should move sideways. Chicago is tight on prime grades (such as #1 busheling and bundles) with sideways to a slight uptick expected there.

The question is one of demand. Did the mills buy enough scrap during the month of June or will they need to increase purchases as they move into July? We will have our answer sometime next week.

The post Ferrous Scrap Prices Bottomed in June – Sideways to Up $20 in July (maybe…) appeared first on Steel Market Update.

Latest in Market