US ferrous scrap prices for September are heard steady to lower this week, even as flat steel prices are reported at higher levels this week, as flat steel supply is expected to be reduced as a result of moved-up scheduled maintenance outages at hot-strip mills around the US, market insiders told SteelOrbis this week.
Most planned maintenance outages usually occur later in the fourth quarter on an annual basis, however, this year, market insiders tell SteelOrbis that a growing outlook for an improved steel market later this year following the US presidential elections and an expected September Fed rate cut has prompted many mills to move up their planned outages. An earlier exit from maintenance would allow mills to sell into a higher priced market later in the year, they said.
“I am hearing September scrap prices at sideways (to August) right now,” said one scrap market dealer. “Mills are trying to keep finished steel prices from eroding, however, there are a lot of maintenance outages that could have a regional effect on demand.”
Spot hot-rolled coils are reported this week at $675-$700/nt ($744-772/mt) or $33.75-35.00/cwt., up from $655-665/nt or $722-733/mt ($32.75-$33.25/cwt.) on a delivered to customer basis during the week of August 12.
Industry reports estimate nearly 1.3 million short tons of mostly flat-rolled steel capacity will be offline in the period from September through December as a result of planned maintenance outages lasting from three days to about three weeks. During this time, market insiders said mills are likely to require less scrap for steel making operations, though the price of flat steel and finished steel products could rise as mill output is reduced.
Based on sideways to lower versus August US scrap settlements, Midwest busheling scrap for September is assessed at or below $355-$375/gt ($361-381/mt) delivered to mill. September shredded scrap is assessed at or below $370-380/gt ($376-386/mt), while September HMS#1 and P&S scrap are expected to settle at or below $320/gt ($325/mt) and $345-355/gt ($351-361/mt) delivered to mill, respectively.
On the US East Coast, sideways to lower September scrap would peg busheling at or below $350-385/gt ($356-391/mt) delivered to mill, while shredded would settle at or below $370/gt ($376/mt) delivered. HMS#1 and P&S scrap are forecast to settle for September at or below $290-315/gt ($295-320/mt), and $320-340/gt ($325-$345/mt) delivered to mill, respectively.
On the US East Coast, scrap insiders report that dock prices for scrap, a solid indicator of demand for US export scrap, declined by about $10/gt ($10/mt) over the past two weeks.
Insiders added that an abundance of billet combined with flagging demand in overseas markets was also expected to exert downward pressure on world scrap prices during September.
“Overseas, it seems that scrap is now showing some weakness and might be headed lower for next month,” an import rebar dealer told SteelOrbis during the week of August 12.” 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 during the week of August 12. “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.”