US scrap prices for August are once again reported sideways to up $20/nt ($22/mt) as buyers and sellers’ position back and forth, even as reports of dwindling scrap supplies persist across the US Midwest and Northeast, scrap insiders told SteelOrbis this week.
As reported earlier by SteelOrbis, East Coast scrap dealers estimated local yard inventories were down between 20-30-percent in recent weeks on a combination of hot weather and low prices being paid to peddlers. One Midwest scrap dealer estimated his inflows from Tier 1 and Tier 2 manufactures were off as much as 50 percent.
This week’s scrap price outlook differs little from the week of July 22, except that reports are beginning to mount that some Midwest mills are holding out for sideways-to-July pricing, hoping sellers will concede during the August buy cycle, which is expected to begin in earnest during the week of August 5, and conclude no later than Tuesday, August 13.
“There’s really not much new on the scrap front this week,” said one Midwest scrap broker. “Except that we’re now seeing a back-and-forth between sellers (who want plus twenty) and the mills who want to buy at sideways to July.”
Scrap dealers report a more “optimistic” environment this month regarding scrap prices versus July, they say, given persistent reports that inflows into yards are off sharply.
“People seem willing to adjust their budgets to accommodate a higher price of scrap this month,” said another Midwest scrap dealer.
Reports of mills trying to bid down the higher price of August scrap are beginning to mount, market insiders say.
“Mills are trying for sideways, and I even had one cancellation,” added a third scrap market insider. “I believe primes will perform the best,” he said. “I’m seeing maybe up $20 for primes and sideways on obsoletes,” he added. “Mill orders are a bit tepid, and inflows are down 30 percent-ish. The recent HRC (price) bounce might be trying to stem the decline?”
On July 29, steelmaker Nucor increased its Consumer Spot Price (CSP) for hot-rolled coils by $25/nt ($28/mt) to $675/nt ($744/mt) FOB mill, the first price increase since May 20. In a letter to its customers, Nucor said” higher raw material prices and increased order entries from its customers’ resilient underlying demand,” was the primary driver behind the price increase.
“If that (the Nucor price increase) doesn’t signal that the scrap market is up for August, I don’t know what will,” remarked another Midwest scrap broker. “All grades are going to require an extra $20 bill for August scrap.”
The Midwest broker estimated that his inflows of mostly obsolete scrap grades as well as industry scrap from tooling shops was off between 15-20 percent month to month. “The mills are trying to push for sideways on busheling, but it’s not going to happen because we’re seeing a bit of a demand uptick from the mills.”
Based on July US scrap settled prices, a sideways to $20/mt increase for August would put Midwest prime grade busheling scrap at flat to $20/gt above the July settle price of $355-375/gt ($361-381/mt) delivered to mill, while HMS#1, which has a more limited application locally, would be at to $20/gt above $320/gt ($325/mt) delivered, scrap market insiders said. P&S scrap and shredded grades would be at to $20/gt above $345-355/gt ($351-361/mt), and $370-380/gt, ($376-386/mt) delivered to mill respectively, scrap market insiders told SteelOrbis.
In the US East Coast scrap markets, busheling scrap vicinity Pittsburgh would be at to $20/gt above $350-385/gt ($356-391/mt) delivered to mill, while shredded scrap would be at to $20/gt above the July settle of $370/gt ($376/mt) delivered to mill. P&S grades would be at to $20/gt higher than the $320-340/gt ($325-345/mt) reported delivered to mill range, while HMS#I would be at to $20/gt above $290-315/gt ($295-320/mt) delivered to mill.