RMU October survey: Insights from industry voices

From the processor/smelting perspective, the situation appears less stable. One processor commented, “No, the global environment is short scrap, which is why Europe is implementing restrictive measures on scrap exports.” Although demand is softer than it was last year, there’s still a sense of unpredictability, particularly as we approach winter when supply typically tightens.

On the demand side, overall, 68% of the respondents described demand as “stable.” However, a manufacturer comment of “supply is ahead of demand” shows that demand is poor. Scrap dealers also see poor demand, noting that “flow has been slow for a while,” with little pickup on the horizon.

Traders are also observing weak demand, especially within the U.S. market. One trader explained, “demand from consumers in the U.S. is lukewarm,” reflecting a more cautious approach from buyers who may be holding off due to market uncertainties.

Most anticipate meeting their monthly forecasts, but responses indicate a divide in outlook. While manufacturers and processors feel confident about their targets, traders are split, with one broker saying, “Half of us will meet forecast, while the other half won’t.” This mixed sentiment underscores the market’s unpredictable nature, especially as scrap prices face pressure from sluggish exports and limited domestic demand.

In terms of specific pricing outlook, the majority of respondents see busheling prices hovering around $400-449/gt for November. While dealers predict stable prices, some manufacturers have a more cautious view, with one stating, “Demand isn’t there, so prices are likely to stay between $350 and $399.” As mills are looked upon as talking down the market, we still see it as a noteworthy statement. Also, while dealers show a lack of confidence for improving prices, the overall view for November is that busheling won’t fall.

So, while stability may hold for now, any sudden demand shift could have a ripple effect causing spot prices to increase.

In transportation, both trucking and rail received an overall rating of “adequate.” Of course, since there is not much demand at play, logistics tend not to be a major concern. It’s when demand is up that we see a sudden spike in prices and lack of availability and/or delays. But for now, the transportation waters look to be calm, with one stating, “I think they are currently adequate, but that can change quickly if demand increases.”

Domestic demand is seen as decreasing, with 60% of participants marking a downturn, particularly within ferrous scrap. Manufacturing slowdowns in key industries, with the auto industry playing a key role. One smelter shared, “Manufacturing is in decline in most segments,” a pattern that could create excess supply as scrap piles up without sufficient demand to absorb it.

Meanwhile, export demand is largely flat, with processors and dealers watching for potential shifts after the U.S. election, with one commenting, “export will remain stable as the world is looking to see the results of the U.S. election,” emphasizing the market’s wait and see approach on international sales. Which is exactly what we here have been indicating for the last couple of months now.

On a different note, one area that isn’t a “wait and see” situation is the aluminum Midwest premium (MWP). As one scrap dealer put it, “MWP is a unicorn.” Right now, the premium is around $450 per metric ton over the LME cash price, up over $35 per ton since the start of the year, already indicating a physical deficit. And we don’t even have to wait for the elections to see an impact, as that will likely give the MWP an extra push and close out the year on an upward trend.