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Early shred sale bets on sideways market

Keywords: Tags  ferrous scrap, shredded, Sean Davidson

NEW YORK — An early sale of shredded scrap to three large brokers in the Ohio Valley region has set a sideways tone for September’s domestic ferrous scrap market.

After initially committing 40,000 gross tons of shredded steel scrap to brokers earlier this past week, the seller based in upstate New York increased the total tonnage by another 10,000 tons Friday. The sales were completed at delivered prices between $400 and $408 per ton, which is sideways to where most shredded traded in August, he told AMM.

"Some major mills were at $400 for shred last month, while some with bad credit or other such issues were paying up to $410. My sales prices fell in that range and were therefore sideways," he said.

But while the price movement was sideways from the bulk of last month’s sales, the seller, known for completing sales early, said the latest sales actually represented a $10-per-ton increase for him after his previous month’s early sales for August delivery eventually finished $10 lower than settled prices.

For September, the seller said he will aim for sideways pricing on prime and obsolete grades in anticipation of a sideways to "soft sideways" market that he predicts could still slide $5 per ton.

"Export seems like it’s weakening a little. (One exporter) said overseas is a little shaky. I think the first sale is your best sale this month," he said.

The seller said that significant price recovery in August had helped improve the flow of scrap into some yards and he anticipates slightly weaker demand from steel producers in September. "There was more demand last month. It will be a little weaker—down 5 to 10 percent—in September," he said.

Other market participants confirmed the latest transactions and price levels. Most said the price range represented a flat market, but one source suggested the price range was down $5 from where he pegged August’s market.

A few large mills in the region told AMM they had not yet made any purchases, which indicates that the scrap committed to brokers has yet to find a home.

"I have not made any recent purchases of shred and have not purchased any shred for September yet," a buyer at one large mill said. "I’m expecting September pricing to be sideways to plus or minus $10 per gross ton."

A buyer for another mill said his mill has not purchased any scrap at any price for September so far. "My understanding is shred sold mainly in the $400 to $410 range last month, with some transactions even higher," he said, making no reference to this past week’s trades.

A third source said there was still no clarity on final delivery points for the scrap. "As I understand, he sold 10,000 to 12,000 tons each to (two different brokers). I don’t know where they placed the material or if they actually placed all of it yet. I actually heard the delivered number was $402 per gross ton," he said.

Most sources throughout the region agreed that they are anticipating a sideways market for September.

"Domestic mills seem to want to be sideways or even down a few dollars. I believe domestic business will be sideways to up a few dollars," a fourth source said.

With respect to the overall domestic scrap market, AMM sister publication Scrap Trends Outlook (STO) reported this past week that most respondents in its monthly survey expect prices next month to trek sideways at worst.

STO surveys a large number of industry participants. As a result of those surveys as well as industry data such as steel inventory figures, it compiles an indicator of the trend in scrap prices. A score above 50 implies the market is set to rise, while below 50 means it is expected to fall.

For September’s market, STO’s trend indicator registered 55.2, indicating a slightly bullish trend. The speculative outlook reiterates an earlier AMM report that most dealers are predicting a sideways to slightly up market (, Aug. 20).

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