Ferrous Scrap Prices Up in Early October Trades

Following on declines in August and September, ferrous scrap prices in October are settling at an increase of $20 per ton for prime grades and $10 per ton for obsolete grades, according to Steel Market Update sources.

A dealer in the Northeast reports that the Detroit market has bought Busheling at $390/GT, up $20; Shredded at $325/GT, up $10; and Plate and Structural at $315/GT, up $10. Other mills are likely to follow suit in the coming days. Obsolete grades will be stronger in the southern districts than in the Northeast and Midwest, he said.

“October is usually a down month for the seasonal procurement of scrap. However, given Section 232, demand for scrap is now higher than in the last several years. The drop in scrap prices in August and September gives this October a chance to rise since the supply into yards has decreased with the downward pricing,” he added. 

Looking ahead to November, the dealer said he expects the upward pressure on scrap to continue. “At worst, I think the market will trade sideways in November. Dealers don’t like to sell much in December, knowing that January is likely to be a stronger month.”

Another source reports that in the South, the price increases are reversed, with the obsolete grades up by $20 and the primes by $10. “Many dealers in the North wanted more for obsoletes knowing that demand remained firm and inflows are slowing. I imagine they did not sell everything they could have sold. It’s a missed opportunity for the mills, in my opinion, as there is now more likelihood of another bump in price next month.” 

Exporters on the East Coast are generally short physical scrap and having trouble procuring it at the $280-ish dockside prices they are offering, he added. “Export prices seem stable for now, so the lack of flow should be supportive of at least current overseas price levels through January 2019,” he said.

Mike Marley of World Steel Exchange Marketing confirms that prices in Detroit are up $20 per ton on busheling and $10 per ton on shredded and cut grades. The same price moves were followed by some mills in Chicago and Pittsburgh, but not in the South and East, he said. In the South, one major sheet mill adopted the same price hikes—up $20 per ton for busheling and $10 per ton for shredded and cut grades—but a long products mill in that region, which buys little or no busheling, increased its shred price by $20 per ton. In the East, one mill raised its offers for both No. 1 heavy melt and five-foot plate and structural scrap (P&S) by $20 per ton because of stronger export demand and an increase in the buying prices at the docks.

Differences in scrap demand and availability in various regions has clouded the pricing picture, Marley said. This is especially true for the industrial steel scrap and the EAF-based sheet steelmakers. Some are concerned about scrap supplies, namely the busheling and bundles that account for as much as 50 percent of their melt needs.

Rival flat-rolled steel producers may be outbidding each other for busheling and bundles, but are less troubled about the potential for short supplies of shredded. That concern may rise as they get closer to winter and the threat of snow and colder temperatures affects feedstock flows into dealers’ yards, as well as processing and transport of obsolete scrap.

Added to those concerns about busheling supply are threats from some dealers that they may hold back busheling and bundles this month. Their goal is simple: Getting bigger price increases in November and December. Some dealers are displeased that they have not reaped the same price gains for their scrap that domestic steelmakers have obtained for their sheet products, and believe this month may be the best time to push for higher prices, Marley said.