US ferrous scrap pricing for the month of October is seen sideways to higher, because supply remains tight at local scrap collection points, and fewer US mills are expected to be offline for maintenance during October, resulting in improved demand from mills for scrap inputs, market insiders told SteelOrbis this week.
Market contacts added that ongoing low demand for finished steel products such as appliances and automobiles, due to ongoing US economic malaise, has reduced manufacturing activity, lowering the amount of available prime grade scrap normally available from Tier I/II manufactures.
“It’s a very tight market right now, even though demand is not that great,” a scrap market insider told SteelOrbis. “There’s limited availability for scrap, so as a result, everyone’s chasing the same tons.”
Market insiders said the plethora of planned outages at steel mills during September was expected to decline for the months of October and November, resulting in a market bottom having been reached.
“We’ve heard that there’s about 17 mills having outages right now,” another insider said about the September situation. “That number is expected to decline to about 14-15 mills in October, which should improve mills’ demand for scrap.”
While October scrap pricing is generally seen sideways to higher at the moment, some market contacts reported so-called “back door scrap deals” being done at by mills for September spot scrap at $5.00-$10.00/gt ($5.00-10.00/mt) discounts to September settled prices.
“The low prices reported for billet in overseas markets combined with ongoing mill maintenance has caused inventories to remain high, so we’re hearing a fair amount of back door scrap deals being done,” another contact told SteelOrbis. “September scrap prices could go down more.”
At last report, September delivered dock pricing on the US East Coast was off about $10-$20/gt ($10-20/mt) from August levels as a result of mostly lower billet pricing and scant new steel demand in overseas markets, even as Turkey was said to be purchasing increased amounts of HMS I/II scrap from the US in anticipation of a potential October 1 dockworkers strike at East Coast and Gulf Coast port facilities.
It’s estimated that about 43 percent of all US imports flow through the US East Coast and Gulf Coast ports currently subject to interruption should a strike occur after the September 30 current six-year contract expiration. Contract talks are currently stalled, the International Longshoreman's’ Association (ILA) said, and the Biden administration has no plans at this time to institute Taft-Harley to break up a strike should one occur on October 1.
Based on September scrap settles, Midwest prime busheling scrap for October delivery is assessed sideways to higher than the September settle of $355-$375/gt ($361-381/mt) delivered to mill. Shredded scrap, which declined $20/gt ($22/mt) during the September buy cycle, is assessed sideways to higher than the $350-$360/gt ($356-366/mt) September settle, while October HMS#1 is seen sideways to higher than the September settle of $320/gt ($325/mt). At current, P&S scrap is discussed sideways to higher than the September settle of $345-355/gt ($351-361/mt) delivered to mill, insiders said.
On the US East Coast, September busheling scrap is expected to settle sideways to higher than the $350-385/gt ($356-391/mt) delivered to mill September settle, while shredded is talked sideways to higher than the $370/gt ($376/mt) September settle. HMS#1 and P&S scrap are also forecast to settle sideways to up from the September settles of $290-315/gt ($295-320/mt), and $320-340/gt ($325-345/mt) delivered to mill, respectively, market insiders told SteelOrbis.