Ferrous Scrap Settles Down $20 for April

Written by John Packard

Editor’s note: The following comments on where ferrous scrap settled for April come from one of SMU’s sources:

U.S. scrap market prices gave way to a lull in export demand, mill outages and a perceived increased flow of obsolescent scrap due to the onset of spring weather. It ignored the flooding, which has inhibited the flow of scrap downriver to the Ark/Tenn mills from Chicago and the upriver flow of pig iron to all mills north.

Scrap export prices have not dropped that much with HMS/Shredded selling at $315 MT/$320MT CFR Turkey. These prices will probably weaken as the U.S. market adjusts downward. However, the general view is Turkey will need to buy more scrap in April/May.

Domestic scrap prices fell by $20 GT across the board in April despite some concern about busheling and bundle availability since pig iron is a bit scarce. In the Detroit district, that led off the buying for April; busheling settled at $350 GTD while shredded found a floor at $315 GT. In Cleveland, busheling is $380 GT and shredded is $340 GT. It didn’t take long for the rest of the consuming districts to fall in line. It looks like these prices will hold and the mills will get what they need. Some feel the increased scrap flows going into May will persist, keeping the market even weaker. 

In all fairness, April is a seasonally down month for scrap, as is May. So, this should come as no big surprise. 

It’s hard to say when the river system will return to normal. Arriving vessels into New Orleans have incurred substantial demurrage bills. Since most of the mills, with their in-house traders, are buying direct, they will have to eat this extra cost. If independent traders were used, the demurrage would be their responsibility.

Pig iron prices will weaken and there were some unconfirmed report of sales below $370 MT CFR. With scrap still under pressure, prices for pig iron will be down modestly.

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