NEW YORK Aggressive pricing by St. Louis steel mills fueled by a surplus of No. 1 busheling has finally pushed the prime grades price below that of shredded steel scrap, which traded sideways this month.
"It looks like St. Louis will become the first market to pay more for shred than busheling," a source told AMM Friday.
"Shred sold higher than busheling," a second source confirmed. "Busheling ended up anywhere between $5 to $10 down depending on where you traded last month."
According to sources in the St. Louis market, the aggressive pricing for No. 1 busheling began early this past week, when consumers came out seeking a large $10-a-ton cut as dealers fought for a sideways market.
By Friday, mill buyers, brokers and dealers confirmed that a weeklong dealer standoff had been largely unsuccessful, with No. 1 busheling reportedly sold down between $5 and $10 per gross ton depending on the buyer. On average, No. 1 busheling settled at $418 per gross ton for May, down about $7 per ton from the bulk of April business.
"Prime is definitely down. It depended on who you were (and) at what number you were at last month. The range was down $5 to $10," said a third source.
The market largely attributed the pullback in No. 1 busheling prices to oversupply.
"I hear some dealers possibly have large piles of prime scrap on the ground that theyve been building since January. Buyers took advantage of that," one large dealer said.
But while No. 1 busheling dropped by $7 a ton, shred lost less ground in St. Louis, falling on average just $2 a ton from April prices to $423 per ton due to a tightness in supply. That puts it at a slight premium to the traditionally stronger No. 1 busheling gradea pricing inversion that some sources said could prove worrisome.
"Shred for the most part went down a little. But busheling lost more ground. The inversion is not good for the scrap market because it means everything is worth the same. But the materials are not the same. So something will have to give," said a fourth market source.
At least one market player predicted the trend might be short-lived, especially because many mills would prefer to buy No. 1 busheling over shredded scrap when comparably priced.
"It will correct itself. Theres a 50-50 chance that will happen by next month. If prime flows are still good and order books get a little weaker, then shred will start going down," said a fifth source said.
But while most sources agreed the prices had inverted this month, at least one denied the trend, noting that it saw the grades trading largely "level" with each other.
"We didnt see a significant flip. Maybe for small packages sold there was a flip, but for the most part, we saw it on level," a sixth source said.