US domestic scrap for July delivery is now discussed mixed as a slight improvement in international scrap prices and rising freight rates to overseas ports comes face to face with continued low demand and falling prices for finished steel products in US markets.
SteelOrbis market insiders now say that some US Midwest mills are likely to pay strong sideways prices for July, while others in the Eastern US see the July market mixed sideways to potentially higher depending on grade. Most contacts, however, temper their expectations with a reminder that US finished steel pricing has been in freefall since early April as finished steel demand continues to wane.
On June 24, US steel maker Nucor reduced once again its weekly Consumer Spot Price -the price it charges for hot-rolled coils at all of its producing mills- by $35/st ($39/mt) to $680/st ($750/mt) FOB mill. Since releasing the CSP index in early April, Nucor’s HRC prices have declined more than 18 percent as demand for finished steel goods remains muted amid high interest rates, soaring year-over-year inflation statistics, high energy prices, and a looming US presidential election in November.
The July scrap forecast differs from just earlier this week, when the predominant trend in market surveys indicated a soft-sideways to $10-$20/gt ($10-$20/mt) less than June expectation for the new month across all grades with the possible exception of primes.
“I think the scrap market got some legs this week,” remarked one Midwest scrap market insider about a bump in international scrap prices and a potentially revised US July outlook. “Exports from the US East Coast were up a little bit, which could tighten things up a bit in the US.”
Several market contacts added that decreased monthly flows into scrap yards was supportive for July pricing. Recent heat waves across the Midwest and Northeast combined with low prices have reduced interest in selling scrap, they said.
“There’s not a lot of scrap coming into the yards and inventories are way down for the current month,” said another SteelOrbis market insider. “It’s more of an accumulation thing, because scrap’s just not coming in, and the rhythm is way off.”
Contacts cautioned that even though export pricing was up a bit, and scrap at yards might be tighter, various US steel indexes such as the CRU index, continue to show declining US finished steel prices.
“My gut tells me that not all (US domestic) grades are going to go up,” the Midwest contact added. “I am expecting to see a slight bump up in busheling versus a decline in shredded. Busheling is historically about $20-$40/gt ($20-$40/mt) higher than shredded, and right now they’re just about the same price.”
Other Midwest grades such as HMS#I and P&S, he said, are seen mixed sideways depending on grade.
“It’s 50-50 right now it could go down $10-20/gt or up $10-20/gt,” said another scrap trader. “A lot of people are nervous about pricing going into July. At this point, scrap dealers might be better off buying cheap and stockpiling their scrap, but, who knows, it’s still pretty early.”
On the US East Coast, consensus seems to be developing for a sideways to $10-$20/gt ($10-$20/mt) increase for July scrap, based on better export pricing on strong sales to Turkey, India and Pakistan, market insiders told SteelOrbis this week.
“I think the mills may have been too aggressive in taking pricing down,” said another scrap market insider. “Last month we sold a lot of scrap, this month we’re seeing a lot of variances from customers, so we could be in for a bump up.”
This week, Ohio Valley busheling scrap is discussed at $375-$385/gt ($369-$379/mt) delivered to mill, while shredded is talked at $365-390/gt ($360-$384/mt) delivered to mill depending on quality, dealers said. Five-foot P&S Midwest scrap vicinity Cleveland and Chicago is discussed at $340-$360/gt ($335-$354/mt) delivered to mill. For HMS#I, basis Chicago, Cleveland, and Pittsburgh pricing is discussed at $300-$330/gt ($295-$325/mt) delivered to mill.
US East Coast busheling is discussed this week at $335-$340/gt ($330-$335/mt) delivered to mill, while P&S is talked by dealers at $320-$325/gt ($315-$320/mt) delivered to mill. Shredded and HMS#1 are discussed at $360-$390/gt ($354-$384/mt), and $290-$295/gt ($285-$290/mt) delivered to mill, respectively. East Coast containerized shredded scrap for export is last discussed at $385-$390/gt ($379-$384/mt), with strong interest coming from India and Pakistan, market insiders tell SteelOrbis.