Ferrous Scrap Prices Flat to Slightly Higher in November

Scrap pricing for November is difficult to generalize with notable regional differences, but for the most part obsolete grades have traded sideways while prime grades have seen a small increase, sources tell Steel Market Update. Scrap prices for December are widely expected to move higher, lending further support to higher finished steel prices as the year comes to an end.

“Prices are still liquid today [Tuesday] as mills that have not covered continue to seek material and third-party brokers try to build long positions into December. In late trading, prices are moving up in Chicago while markets to the east and south are trending sideways,” reported one dealer.

With the majority of the tons traded for November, though, pricing for the Ohio Valley and eastern markets is sideways for obsolete grades and up $10-20/Gt for primes, he said. That puts the average price for shred at $285-295/GT, bush at $320-330/GT, HMS at $250/GT and P/S at $265-270/GT.

“Both mills and brokers are seeking additional scrap and trying to find a price level that will attract remote tonnages. This scenario will add to the already bullish view of the December scrap market and pressure mills with lower inventories to expedite their end-of-year scrap buys (at higher prices),” the dealer added.

In general, ferrous grades traded sideways from October levels, save for some slight upside ($5/GT) to prime grades, said another scrap executive. “It seems that while mill demand remains strong, and exporters sold multiple cargos last week, U.S. domestic consumers did not want to overbuy scrap heading into the end of the year. Some larger scrap suppliers had oversold in October, expecting the November market to trade lower, so they need to finish their old orders and were incentivized to not ask for more money for November scrap that would have cost them more at their scales and on the margin.”

This source puts U.S. shred prices at around $290-$300/GT in November (with $5 extensions on both sides of that range for local and springboard trades). He puts HMS at around $270/GT for remote grades ($25/GT less for local grades), and prime scrap at around $300/GT. The latest export 80/20 sales to Turkey were in the $295/MT CIF range and should trade higher in the not-too-distant future, he said.

Commented another scrap exec: “I would not characterize the November market as sideways since mills had to sit on dealers to sell at these prices. Many were successful, but when mills in the Midwest regions, like in the Chicago and Cleveland districts, attempted to do so, they met dealer resistance for several reasons. Over the last several months, Chicago area mills were able to limit pricing due to the closure of the Illinois River, which isolated scrap in Chicago and kept it from flowing to its usual homes on the Mississippi. This worked quite well when several mills didn’t need to buy full complements of scrap. However, now that the river is open to barging, these mills now need to buy more scrap and prices for steel have increased. So, they had to bring their prices up to meet the competition. In the Cleveland district, the mills in Northeast Ohio may have waited too long to buy and had to raise busheling prices by $20/GT and shredded by $10/GT, making those prices $330 and $295, respectively.”

Scrap dealers predict prices will trend even higher in December and January. “Looking forward, I see no downside for the next 60 days at least. Export demand remains firm, and scrap flows are not going to improve without higher prices as we head into a seasonally slower period. U.S. mills will burn scrap inventory and need to buy scrap in December and January. December should have some upside by $10-$20/GT, and there should be more on top of that in January,” said one dealer in the Northeast.

“The real negotiations will occur next month,” added another, “since scrap sellers are not going to want to sell much as they are fairly sure of an increasing market for the next 60 days. Scrap flows are already down and Indian Summer is coming to an abrupt end soon. Export demand is basically out-of-control with prices in Turkey north of $300/MT, with buyers in Mexico and South America paying even higher. Exporters are declining to quote on shredded cargoes due to lack of material.”

Pig Iron Market

Reported on expert on the pig iron market: “Besides being scarce for shipment prior to late January, pig iron prices have also increased. The Chinese are back and have paid slightly more than $400/MT CFR for a Russian cargo. Brazil also sold to China last week at a lower price. The U.S. mills have been sidelined due to price concerns, but if they have to buy soon their price will be at least $390/MT CFR NOLA. Their last buy in October was at $377/MT.”