Ferrous Scrap Prices Trade Flat to Down in April

Ferrous scrap prices have traded flat to down in April following a big jump in March. Steel Market Update sources report the price for obsolete grades down $20/GT, while prime grades traded sideways.

The price for shredded scrap is about $430/GT delivered to the mills in the Midwest and South. Prime grades are around $130-140 per ton higher at $560-570/GT. HMS is at about $405/GT.

“I was a little surprised as the market came in for a pretty soft landing,” said one dealer in the Northeast. “Despite good demand, mills were able to reduce buy prices on the theory that it’s spring and dealers will be willing to offer tons in anticipation of improving flows. That may or may not turn out to be correct, but only time will tell.”

In comparison, shred to Turkey is theoretically around $440/MT CIF, and freight rates have come back down to more typical levels in the mid-$20s for Supermax bulk cargos, he said.

“Either way, I think after about six months of very volatile pricing, most of which went upwards, we are getting closer to a scrap market in balance for the next few months,” he said.

Several variables will drive market moves in the coming weeks and months:

• Export demand (which bottomed in early March and is now slowly rising).
• How much busheling is actually generated in light of supply-chain and auto-manufacturing disruptions due to COVID and the microchip shortage.
• And how much prime scrap actually arrives in the U.S. from Europe. 

“Despite what should be improving inflows to come, I don’t see as much price volatility in the next 30-60 days as we’ve experienced over the last several months,” the scrap exec added. 

Scrap prices should remain firm, agreed another source, with both foreign and domestic demand at strong levels. “Spring scrap collection will not be as pronounced this year due to the large price increases in January and March. Next month there will be less obsolete available,” he said.

With the help of scrap prices, which have been trending mostly higher, finished steel prices continue to set new records week after week. SMU puts the current benchmark price for hot rolled steel at an all-time high of $1,340 per ton.

One industry participant offered the following observations on the pig iron market: “The U.S.-based EAFs are trying to drop prices but are being resisted by low phos producers in North Brazil, Ukraine and Russia. They have been able to buy high phos BPI from South Brazil at lower prices (only $20/MT lower at $540/MT CFR). After this transaction, another high phos cargo from South Brazil was traded at an approximate cost of $560/MT CFR New Orleans. They also bought a small shipment of BPI from India (at an unknown price), where most production is higher phos. The Russians want to increase prices from their last sale at $570/MT to about $600/MT. The buyers are resisting this price for now.”

By Tim Triplett, Tim@SteelMarketUpdate.com