US scrap prices for August are now discussed at strong sideways to higher for August, as domestic scrap dealers indicate supplies at local yards in both the Midwest and Northeast are off sharply month on month.
Last week, East Coast scrap traders estimated local yard inventories were down between 20-30 percent on a combination of hot weather and low prices being paid at yards.
One Midwest scrap dealer told SteelOrbis that his inflows from Tier 1 and Tier 2 manufactures he normally deals with were off sharply. “My inflows are pitiful,” the Midwest scrap dealer said, predicting strong sideways scrap pricing for August. “My inventories on the ground are off by probably 50 percent.”
The dealer explained the July 4 weekly holiday shut-downs at Midwest manufactures would account for some of the month-to-month scrap losses at his yard, while reduced inflows from scrap peddlers due to recent heatwaves and low yard prices might account for some reductions as well.
“It’s really hard to predict the scrap pricing anymore,” he added. “The outlook seems to be changing every week, and the closer you get to the new month, the more it seems to be bouncing around.”
Another market insider concurred with the recent call for strong sideways August scrap pricing on reduced scrap inflows, though cautioned that mills have also reduced their buying activity because of low finished steel demand.
“We may be at the bottom (for scrap prices), but I believe at this time we are strong sideways at best,” he said. “We’re likely to see sideways pricing and probably continue in a tight range until Q4,” he added. “Scrap inflows are slow, but the mills order books are soft as well.”
Another scrap dealer heard talk about steady to potentially higher August scrap prices, though cautioned that it will largely depend on how much inventories are being held by the mills when the August buy cycle starts in the first and second week of August.
“We’re hearing the same thing about higher scrap prices for August, but that does not mean it will happen,” he said. “It is all about mill supply. How much supply do they have? If they are big buyers (this) month, we might be looking at the (price) bottom. If they are not big buyers, we could see numbers go down.”
July scrap pricing settled in the Ohio Valley flat to down from June levels mostly on reduced demand for finished steel products like automobiles and appliances. In the US Northeast, scrap prices settled mostly higher for July, as strong export demand for scrap and tight yard inventories supported prices.
A strong sideways August scrap forecast would put Midwest busheling scrap at or 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 or above $320/gt ($325/mt) delivered, scrap market insiders said. P&S scrap and shredded grades would be at or 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 in the vicinity of Pittsburgh would be at or above $350-385/gt ($356-391/mt) delivered to mill, while shredded scrap would be at or above the July settle of $370/gt ($376/mt) delivered to mill. P&S grades would be at or above $320-340/gt ($325-345/mt), while HMS#I would be at or above $290-315/gt ($295-320/mt) delivered to mill.
On the finished steel side, on July15, US steel maker Nucor announced its weekly Consumer Spot Price -the price it charges for hot-rolled coils at all of its producing mills- would decline another $10/gt ($10/mt) to $660/gt ($728/mt), following two weeks of steady pricing at $670/st ($739/mt) FOB mill, the steel makers said in a letter to all of its customers. Since releasing the CSP index in early April, Nucor’s HRC prices have declined nearly 20.5 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.