Recycled metals: Ferrous faces uncertainty as fall approaches

Now that Labor Day is in the rearview mirror, let’s take peek at where we are with our vocations rather than our vacations. All ferrous markets are facing some serious concerns as we approach the fall quarter on the horizon. Frankly, the steel markets are underperforming, which in turn affects the ferrous scrap markets negatively. Prices for HRC have inched up, but does it really have the staying power it needs within a shrinking manufacturing environment?

The domestic ferrous scrap markets remain weak despite sentiment that we’ve reached, what’s become, an elusive bottom. We are hearing less players are of this view now. Sideways would be a gift with the collapse in export prices. The general feeling is the obsolescent scrap market in September will be down somewhat while the prime markets could trade sideways. There have been reports of cancelations of August orders at several mills, but not all. In fact, there have been reports of slow deliveries of busheling at certain mills which could validate the premise that industrial scrap generation is slowing.

On the export side, the billet invasion into Turkey is still underway and first waves should be reaching shore very soon. Prices have stabilized as Chinese mills have attempted to raise prices, but not to any significant extent. Another thing we are hearing is Turkey may be canceling or renegotiating orders from China which are late and higher priced. Not to different than what our mills do here. Meanwhile prices for export grade HMS 80/20 are in the mid-$360’s for US and Canadian origin and high-$350’s for European material. On the USWC, container prices into Taiwan also weakened to $325 MT CFR CY for HMS 80/20.

The pig iron market in Brazil has also experienced a drop in prices to the U.S. In general prices dropped more modestly than U.S. buyers had hoped. Last week, several cargoes were concluded at a price of $465/mt CFR (less $5 to 10/mt) from the South. Lower Phos material from the North was pegged at $475/mt CFR, down similarly.

The US market may not settle until next week as mills are in no hurry at this point, according to sources.