Scrap market awaits direction as mills hold off

The U.S. and Canadian ferrous scrap markets for November have not settled as of Election Day 2024. There doesn’t seem to be a key indicator as to why November prices haven’t settled yet. As most in the industry are doing, we then shift our focus to politics. For the ferrous scrap market, I can’t see a big change occurring, no matter who gets elected president. Nothing short-term, anyways. The mills don’t seem to have a view either, or at least they aren’t showing a lean in any direction either.

All kidding aside, the most recent sentiments are looking weaker for scrap tags. There are still persistent outages and demand is not rising for coils. But, going into winter, I will go out on a limb and predict any downward pricing in November, especially in Chicago and Detroit, will be met with dealer resistance. The mills may force-feed it to the trade, but they will have to pay the larger suppliers at least sideways prices to get their tons. Any downward movement will make December and January that much more expensive.

The most recent sentiments are looking weaker for scrap tags. There are still persistent mill outages, and demand is not rising for coils. But, going into winter, if I was asked which way I was leaning, based on my discussions with people in the market for November pricing, I may just point toward downward pricing in November, especially in Chicago and Detroit. However, it may be met with dealer resistance. The mills may force-feed the declined prices to the traders, but they will have to pay the larger suppliers at least sideway prices in order to get their metal. Any downward movement will make December and January that much more expensive.

On the export front, things look like they may have bottomed, as prices are just over $360/mt CFR Turkey for HMS 80/20. It’s speculative whether this will affect November prices in North America. Pig iron may be a problem going into the New Year after the U.S. buyers successfully got prices lowered by a reasonable degree. But with the tonnages they require only increasing, it is debatable whether steelmakers can fill their needs at these lower prices, phosphorous content notwithstanding.

As for the non-ferrous scrap market, I can’t say we’re seeing much movement here either. It’s pretty slow out there as everyone wants to see what happens with the presidential election. Also keep in mind the holidays begin soon, and year end is right around the corner, both of which contribute to the lackluster market.

But as we mentioned last week, it looks like non-ferrous scrap prices are set to rise, no matter who takes the presidential win. The big question is: how much will the prices go up? And yes, the little support we currently see in pricing is mostly due to a weak U.S. dollar.

Taking a closer look at used beverage cans (UBCs), they’re holding steady between 76-78% of the Midwest transaction premium, which puts them at around $1.06/lb, with the LME 3-month price sitting at $2,616, with a cash to 3-month spread of 32.25. That’s a solid 10% increase from earlier this year, even though the LME price was nearly $400 lower back at that time.

For now, we find the non-ferrous scrap market playing the waiting game as well, hoping the elections will provide some clarity and direction for pricing. Until then, it’s all about patience as we watch and see what plays out. RMU will keep you updated on which direction prices will be trending once the U.S. elections are over, and a new president is elected.