US scrap markets for December are now seen sideways to soft sideways to November settled pricing, a bit weaker than was heard seven days ago, as domestic mill demand for scrap is reported low, despite continued reports of tight inventory levels at local collection yards, market insiders told SteelOrbis this week.
“Industrial inflows are still way off,” said one Midwest scrap insider. “I am looking at soft-sideways with slow inflows offsetting slower mill demand for next month.”
Last week, the consensus among market insiders called for December scrap to settle sideways to November, based on reports of improved market sentiment following the November 5 US presidential election, still low reported inventories at scrap yards, and forecasts for the first blast of cold weather and snow forecast to impact scrap markets the US Midwest and Northeast regions.
“Any hope of sideways right now would be great,” said another Midwest scrap insider, commenting on the weekly change from previous the December scrap outlook. “The markets have been wishy-washy since the week before last. Cash is king right now, and order books (at mills) remain soft, and the only redeeming thing is scrap (in-flows) may be less than demand.”
Scrap insiders caution that fast approaching winter storms spreading across the US Northeast and upper Midwest could cause price spikes in the US Ohio Valley and potentially the US Northeast, given low inventory, even as demand for finished steel from the US auto and manufacturing sectors remains unremarkable thus far in the fourth quarter, and overseas scrap prices remain depressed. Snowfall and colder weather usually reduce inflows of scrap into collection yards, they said.
“Bad weather is supposed to be coming (again) this way, so old man winter might have the last right of say on the market,” the Midwest scrap insider said. “It has happened before where scrap prices spike as a result of cold weather and snow.”
Other scrap insiders already have written off December as a potentially higher scrap month, hoping higher pricing for January and February scrap will improve cash flows for still struggling scrap businesses.
“If mills take scrap down (for December), it will cut off a lot of (inflow), but yes, I am hearing sideways to soft sideways,” he said. “Many suppliers do believe we will see prices go up in January (and) February so hopefully, mills keep prices steady to close out the year. Taking it down now doesn’t do the market any justice in my opinion on all fronts except make things much harder on everyone at this point.”
In the Ohio Valley, based on this week’s sideways to soft sideways December forecast settle, shredded scrap is seen at or below the November settle of $385-390/gt ($391-396/mt), while busheling grades are expected at or below $390-415/gt ($396-422/mt). P&S grades are now seen at or lower than the $376-386/gt ($382-392/mt) November settle, while HMS I/II 80:20 grades are seen at or below the $340/gt ($345/mt) on limited Midwest demand requirements for heavy melt steel, market insiders told SteelOrbis this week. All Ohio Valley pricing is on a delivered to mill basis.
On the US East Coast, December shredded grades are seen at or below the $370-380/gt ($376-386/mt) November settle, while busheling grades are expected at or below the $400-$410/gt ($406-$417/mt) November settle. On the P&S front, December is expected at or below the $340-350/gt ($345-356/mt) November settle, while December HMS 80:20 scrap is expected at or below the $341-351/gt ($346-357/mt) November settle, market insiders said. All US Northeast price references are on a delivered to mill basis.