US ferrous scrap prices for August settled sideways to July levels, as domestic steel mills declined to pay dealers much-anticipated $10-$20/gt ($10-$20/mt) premiums for August material during the recent August buy cycle, which concluded on Monday, August 12, scrap market insiders told SteelOrbis this week.
The failure of August scrap pricing to increase as generally expected, they said, caused finished steel prices to end the week steady to down slightly, as new finished steel demand remains little changed from July levels, they said. As demand for finished steel remains weak, market insiders said, US scrap prices are now expected lower in September, they added, unless market fundamentals improve such as what might occur with the much-anticipated rate cut by the Federal Reserve in September.
Short of the Fed rate cut though, market fundamentals remain little changed.
“Overseas, it seems that scrap is now showing some weakness and might be headed lower for next month,” said one import rebar dealer commenting on the September scrap outlook. “The August market was only able to settle sideways because demand in the US markets remains weak.”
“As the situation in the world economy remains off, there’s a lot more billet available,” commented another US East Coast rebar dealer, reporting flat to lower spot prices for this week. “Foreign billet in many instances is taking the place of US scrap. It’s the same old economic model at work,” he added, “plenty of supply and no demand drives prices down.”
During much of July, market insiders said August scrap was likely to trade higher because scrap inflows into yards were off between 20-50 percent in the US Northeast and Midwest. Solid export demand from the US East Coast markets, they claimed, was also expected to support higher scrap values.
The outlook for August scrap flip-flopped, most said later, because bad economic reports on interest rates, jobs and unremarkable construction spending overshadowed the higher scrap expectation. And as the global markets continue to show weakness, insiders added that abundant billet supply was further reducing demand for US export scrap.
On the US East Coast, scrap insiders reported that dock prices for scrap, a solid indicator of demand for US export scrap, declined in recent days by about $10/gt ($10/mt).
“Nobody knows what’s going on,” said another East Coast scrap dealer. “Dock prices are falling down a little bit because nobody’s buying. People aren’t holding onto scrap, and whatever the price is, people are selling into it.”
New York dock delivered HMS#1 scrap is reported at $290-300/gt ($295-305/mt), off from $300-310/gt ($305-310/mt) two weeks ago. Philadelphia dock delivered HMS#1 scrap is discussed at $290-300/gt ($300-310/mt), off from $300-310/nt ($305-315/mt) on July 29.
“It’s a real sloppy market right now,” reported one East Coast market insider. “And unless demand begins to pick up, we’re going to be stuck in this trend for a while.” He continued, “The one thing that we do know now is that the domestic scrap business is not good.”
Based on August sideways settlements to July values, Midwest busheling scrap is assessed at $355-$375/gt ($361-381/mt) delivered to mill. August shredded scrap settled at $370-380/gt ($376-386/mt), while August HMS#1 and P&S scrap settled at $320/gt ($325/mt) and $345-355/gt ($351-361/mt) delivered to mill, respectively.
On the US East Coast, August scrap pricing settled for busheling at $350-385/gt ($356-391/mt) delivered to mill, while shredded settled at $370/gt ($376/mt) delivered. HMS#1 settled at $290-315/gt ($295-320/mt) and P&S scrap settled unchanged to July at $320-340/gt ($325-$345/mt) delivered to mill.