US domestic scrap pricing for the month of November is seen trending strong sideways to as much as $30/gt higher next month, as mill buying activity is expected to be improved as more idled facilities will have completed annual maintenance programs by start of the November buy cycle, even as scrap inflows and inventories on the ground are reported to be improving given recent higher October scrap prices, market insiders told SteelOrbis this week.
“I believe we are looking at plus $20-30/gt in Chicago,” said one Midwest scrap market insider commenting on the November outlook. “Twenty dollars (per gt) to make up for the sideways move last month, plus another $10/gt.”
During the October buy cycle, the majority of scrap trades reported in the Ohio Valley and the US Southeast were discussed at $20/gt premiums to September settles, though insiders remarked after the October buy cycle that some mills “further west” in the vicinity of Chicago and Detroit only paid sideways pricing to September for their limited monthly scrap purchases.
“Not everybody got plus $20/gt in the Detroit and Chicago markets,” remarked one Midwest scrap dealer. “Some people weren’t treated quite as well by the mills, and only got sideways for their October scrap. Insiders noted numerous “back-door deals” being done late in the October buy cycle, with certain scrap dealers offering large amounts of scrap or better buying terms getting better pricing from mills.
“Larger (scrap) dealers feel like sideways in November, but they are also stock piling large amounts of inventory, so they must be preparing for some upside in the near term or simply can’t sell or move the product fast enough,” said another Midwest scrap insider. “It will also be interesting to see how November plays out with the election. I have my popcorn and my Coke ready.”
Even if less mills are expected to experience outages in November versus October, some insiders caution November and December scrap pricing can be a bit tricky.
“A key downside consideration is that typically, November and December are holiday months, so demand for scrap is a bit more limited,” the insider told SteelOrbis.
Many businesses are expected to be closed for the Thanksgiving holiday on November 28-29, while the Christmas holiday could see businesses closed on December 25-26, and potentially on Friday, December 27.
Based on strong sideways to $30/gt November premiums, Midwest busheling scrap on a delivered to customer basis for November is forecast to settle at $385-415/gt, or $391-422/mt, while shredded grades are seen at $375-405/gt, or $381-411/mt. HMS#1 is likely to settle at $340-370/gt or $345-376/mt, while P&S is expected to settle at $370-400/gt, or $376-405/mt at the close of the November buy cycle.
On the US East Coast, new scrap forecast data was still being evaluated at presstime, so as to arrive at a better estimate for November settles.