Ferrous Scrap Prices Move Sideways for September

Scrap dealers were a little surprised by the end of this past week as ferrous scrap prices remained stable instead of rising $10 per ton as many had anticipated. Steel Market Update wanted to understand what happened that resulted in a sideways market and here is what we learned from one of our East Coast scrap sources:

“The market moved sideways from August to September despite expectations for an increase just last week.  The weaker than expected market really resulted from some reduced buying programs (despite continued solid order books at mills).  USX-ET and ArcelorMittal Coatesville had scheduled outages, a few mills in the OH Valley had a lot of railcars sitting that needed to be unloaded, and several larger buyers were looking to raise cash and minimize inventory over the course of September.  In addition, the exporters were, we’ll call it a little less enthusiastic about the market this week than they were last week. 

“Shred in the east was $365, in the OH Valley it was $385, and down south anywhere from $375-$385 for local suppliers.  HMS in the east was around $345, and the exporters were paying about $330 for local supplies.  Busheling remained around $415-$425 in the OH Valley.

“I don’t see any meaningful weakness going into October.  Demand should be better and dealers will have an inventive because of the season to hold back scrap on weaker prices rather than sell.  Export has gotten quiet again but so long as the geopolitical issues in Russia and Ukraine persist, they will need more scrap.  So they should be back in the market in the next month or so buying for later this year following a very active period in July and early-August.  Most dealers and mill buyers I speak to expect the market to rise as we get into November and December.

“So I see us pretty range-bound for the next 60 days, with the market working its way slightly higher as we get into winter absent changes in outside economic or geopolitical influences.”

A national dealer echoed what we learned from our East Coast source when he told us, “Despite earlier expectations, the scrap market remained relatively flat for September in the Southeast.  I would attribute this to reasonable raw material supplies at the mills coupled with tentativeness regarding steel pricing/inventories heading into year end.  While steel bookings are steady, sentiment seems to be waning as softening ore pricing and disparity between global and domestic scrap and steel prices elevate concerns.  Inbound scrap flows are holding steady at this stage and “sideways” markets appear acceptable to buyers and sellers.  I read earlier today this will be the 5th consecutive month for flat scrap prices. I suspect the reorientation of export into the domestic market is the primary contributor to this balance, highlighted by rising domestic steel production and declining ferrous scrap exports. Should be an interesting few months ahead given all of the variables percolating through the markets today!”

Chicago area heavy melt (HMS) came in at $365 per gross ton delivered while shredded scrap is reported to be selling for $375 per gross ton delivered and #1 busheling at $400 per gross ton.