Prices set to rally in August amid tight supply and rising demand

The prices for the July market weren’t settled until July 8 and now we are approaching the formation of the August market.

In July, most prices were reported as sideways despite mills in the Great Lakes region attempting to buy down. When this didn’t work, mills relented and bought sideways except for #1 Busheling. Dealers resisted sideways, claiming lack of material. They also witnessed failed attempts to buy at $20 less than June prices. So, many of them did receive a $20/gt increase over June prices.

The trade is of the opinion there is not that much scrap being generated at this point. There will be no increase in the supply of scrap going into August regardless of the grade. In fact, industrial scrap generation appears to be slipping. The flow of shredder feed is not going to increase. Prices for all these grades decreased over the last several months due to meager demand by the mills. However, the general feeling is that demand will improve, and prices will have to move up in August.

RMU spoke to a broker in the Ohio Valley area about his views on the August market. He said, “dealers are expecting a $20/gt increase across the board.” He added prime grades could be up more, citing the dearth in industrial scrap supply.

Other factors which could affect the August market:

Export prices are holding steady and have increased slightly recently.
Pig iron offers from Brazil have increased by $5-10/mt to $480/mt CFR.
Increase in demolition scrap may relieve some localized pressure on the scrap markets.
It is anticipated that steel service centers should start buying more material as HRC nears a bottom.

With these factors in play, the August market is poised for potential price increases, and all eyes will be on how these dynamics unfold in the coming weeks.