Ferrous Scrap Prices Likely to Rise in November

After a small decline in October, ferrous scrap prices are expected to strengthen in November and beyond on strong export demand and tightening seasonal supplies, sources tell Steel Market Update.

CRU Senior Analyst Ryan McKinley sees upward momentum for scrap prices in the weeks and months ahead. Export demand is increasing, he said, pointing to a big, $50-per-ton bump in Turkish prices last week. “Scrap is about to get a lot more difficult to collect because of the winter weather, and we are going to see a lot more upside given what is going on in Turkey. I think this all points to stability for now, and maybe some upside pressure in the U.S. over the next 90 days. We could see scrap go up $50-70 in the next three months,” he predicted.

Export pricing has jumped higher by nearly $70/MT since the beginning of October, reported one dealer in the Northeast. Grade 80/20 and shred cif Turkey are at their June 2021 highs again ($510 and $530, respectively). “There is notable demand in Turkey and elsewhere for November and December scrap. Turkish mills have had success selling and raising prices for their products in line with these scrap price increases,” he said. 

Scrap dealer inventories in the U.S. and Europe are quite low at the moment, he continued. “The exporters’ problem is that many of them took sales on the way up and miscalculated how fast and furiously the market would rise. The U.S. shred market has typically followed the export shred price the month following the export price change. So, theoretically, we are looking at a $50-$60/GT shred price increase in the U.S. between November and December, at least. Prime probably won’t trade quite as strong, as pig iron pricing has not increased as much. But the bottom line is that U.S. scrap is tight, especially for obsolete grades, demand is improving coming off some maintenance shutdowns, and there is considerable support for scrap prices to move above their 2021 highs in the coming two to three months.”       

“The U.S. scrap market is still smarting from the pricing the mills stuck them with in October,” added another SMU source. “Most gave in, but come November they’ll be no such acquiescence. The export markets have shot up considerably. Look for prices to be up $30-40/GT or perhaps more.”

Cliffs/FPT Effect?

It’s difficult to say if the acquisition of Ferrous Processing and Trading by Cleveland-Cliffs will have any effect on prime scrap prices this year, but the deal has the potential to shake up the market in 2022, said one scrap executive. “If Cliffs follows through on its plan to use large amounts of prime scrap in its BOFs, things will definitely be reset. When ArcelorMittal owned the mills acquired by Cliffs, instead of using bundles and busheling in their BOFs, they switched to cheaper obsolescent grades, leaving large amounts of prime scrap available to the minimills. Things will definitely change if this usage is implemented by Cliffs,” he said.

Pig Iron Market

Global pig iron prices are on the way up. China scrap prices are now higher than pig iron prices, returning Chinese buyers to the pig iron market. The pig iron price has increased by $10/MT, and it’s looking like this price level may rise further as Brazil is selling out of January shipments and China has been buying from the CIS, reported SMU sources.

By Tim Triplett, Tim@SteelMarketUpdate.com