Scrap Prices Expected to Decline $30-50/ton in June

Steel Market Update sources expect ferrous scrap prices to decline in June, following record high prices in March through May. Some expect prime grades to decline as much as $50 per gross ton from May, with obsolete grades down anywhere from $20-$50 per ton.

“Markets are worsening by the day. It looks like there is continued weakness both domestically and internationally. Our domestic market is suffering from oversupply as the US scrap industry is running on all eight cylinders,” said one scrap executive. “The Russian/Ukrainian war is now starting to depress steel and scrap prices as they try to sell their products at bargain prices.”  He went on to say obsolete grades could bear the brunt of the declines, while prime scrap might be propped up as auto assembly plants take down time.

A second scrap source agreed prices would decline in June due to foreign market influences, commenting, “the fall in global scrap prices over the course of May is going to pressure US domestic prices for the June trade. We are finally beginning to see sales to Turkey again after a long hiatus following the restocking in early April. There has been pushback from exporters to lower their bids further, so it seems we may be at a bottom for now.”

As for the domestic market, he added, “US scrap flows have been weakening as docks and shredders have continued to lower inbound prices, and I expect with another step down for the US market in June, we will see a bottom here too.”

Recall that scrap prices saw the largest monthly increase in our history in March, with shredded scrap trading up $125 per ton to $600/GT and prime scrap up $170 per ton to $700/GT. Prime scrap rose another $75 per ton in April, while shred was unchanged. In May scrap prices declined by $75 per ton, putting busheling at $700/GT and shred at $525/GT. Prior to the Ukraine-Russia war, prices had declined in January and February.

A third scrap executive commented that pig iron prices are coming down as well, with material from India now entering the country. “That will decrease since India has instituted a 15% export tax of this product. It remains to be seen how steel and scrap markets will react to this,” he added.

PSA: You can chart out scrap prices as far back as 2007 using SMU’s interactive pricing tool.

By Brett Linton, Brett@SteelMarketUpdate.com