Ferrous Scrap Prices Mostly Sideways in December

Following increases in October and November, ferrous scrap prices for December settled with relatively little change, report Steel Market Update sources.

“Pittsburgh and points west went sideways. East of Pittsburgh and to the south, prices went down $10 per ton,” said one dealer. Export buying prices are off by $20 per ton, he added. “Declining international markets have capped or dropped domestic prices. The administration’s trade policies have the markets rattled.”

Except for pockets of weakness, down $10-$15 from last month in districts near the coasts, the ferrous market traded sideways in December, concurred another source. That dynamic reflects the weakness of scrap markets abroad. Turkish mills have succeeded in pushing markets lower by as much as $30 per ton from early-November due to anemic levels of domestic and foreign rebar demand, which has been further hurt by falling Chinese steel prices, he explained. 

Reported another dealer in the Northeast, early predictions of a $10-20/GT increase in December never materialized. “The main culprit was export weakness in Turkey and East Asia,” he said. “To some extent, mills didn’t buy as much as usual, for fiscal and seasonal reasons.” He puts December prices at $390-405/GTD for busheling, $360-370 for shredded and $345-350 for HMS.

It’s difficult to predict January scrap prices at this time, he said. It depends on how low export will go. “But, it’s hard to drop prices very much in the winter with the healthy demand for scrap we’re seeing in the U.S.”

January stands to be another month of sideways prices as the mills return to the scrap markets to restock as they normally do, said another dealer. “Assuming domestic markets remain firm and export markets weak, we should see January markets be relatively balanced.” 

Looking deeper into 2019, ferrous scrap depends largely on what happens to the global steel price, explained one of the sources. “Do China and Europe avoid dramatic slowdowns? Does the U.S. domestic market continue to see firm demand? I don’t know the answers to those questions—they require precise economic forecasts and timing. But I can say U.S. scrap is currently trading at a premium to what foreign metal spreads can support. So, I think we will see weakness in the U.S. scrap market to catch up with those overseas levels. I don’t anticipate a dramatic drop, but if U.S. markets declined by $30 over the next 90-180 days, our scrap prices here would be more in line with foreign metal margins. Without better demand overseas, I think we trend along that line, though I am not sure we get there until sometime next spring.” 

Pig iron prices were reported as unchanged in early December. “Pig iron has nowhere to go but down. The lowering of world scrap prices, driven by Turkey, will affect prices of pig iron negatively,” said one dealer.