NEW YORK Earlier
expectations of a $20- to $40-per-ton run-up in ferrous scrap
prices in December have largely subsided, with most market
participants now forecasting a "strong sideways" market and a
few even predicting slight downward pressure if demand from
steel mills and the export market slips.
Although many had said in
mid-November that prices could rise as much as $40 per gross
ton next month based on seasonal trends, most Midwest sources
are now offering a consensus view of a sideways-to-up-$10
Only one Midwest supplier said
he still expects the same $20 to $40 increase, even as some
market players predicted prices could lose as much as $20
compared with November.
"December should be even, with
slight downward bias if export doesnt kick in," one buyer
For the most part, however,
buyers and sellers have pegged the December scrap market to
trend sidewaysalthough most conceded it was too early to
say for sure.
"It is too soon to tell.
Business is slow so there is not a lot of strength to the
market," a second buyer said, nonetheless speculating that
prices would move "sideways to up slightly."
Several suppliers said that a
seasonal drop in scrap supply during the winter months has
historically led to higher prices in December or January.
At the same time, any effort to
push prices down will meet fierce resistance from sellers.
"I think it will be sideways.
Could be up some. I dont expect it will be down any
(because) dealers would hold tons at any sign of softness," a
third mill buyer said.
A supplier source agreed that
the market has little downside. "December being a short
production month and less scrap available, we do not see any
downward pressure on the markets. Some mills may have a reduced
buy in December but this is quickly offset by the shortened
month and less scrap coming in," he said.
A few suppliers cited recent
price increases on certain finished steel products as another
factor supporting higher December scrap prices.
However, many suppliers said
they are still trying to gauge mill demand, with some noting
export trade in the coming days could play a critical role in
where prices settle.
"We have heard weaker, same and
stronger," a second Midwest supplier said. "I dont know
what to tell you. Some mills are a little short and are looking
at slightly up. Others are content to wait and see what the
On the export front, U.S. bulk
export prices to Turkey have dropped by $12 per tonne from the
last confirmed sale after sources reported a single bulk cargo
sale completed Wednesday at between $395 and $396 per tonne
c.f.r. Turkey for an 80/20 mix of No. 1 and No. 2 heavy melt.
The last confirmed bulk sale to Turkey off the East Coast was
concluded Nov. 13 at $407 per tonne c.f.r.
Earlier this week, market
sources said export prices were likely to soften after rumors
emerged of a different sale off the East Coast to Turkey at
around $400 per tonne (
amm.com, Nov. 26).
Weaker export prices aside, some
domestic suppliers nonetheless remain extremely bullish for
"Chicago has had a very strong
appetite for cuts and all of the shredders within 250 miles
cant get enough scrap. I know we have seen a drastic
slowdown at the scale as well as industrial scrap. I know most
inventories are hand to mouth, both in the scrapyards as well
as the mills," a third supplier said.
Outside of the Midwest, market
participants in the Ohio Valley and Northeast speculated that
December would trend largely sideways, with a possible
$10-per-ton nudge in either direction.
Not a lot of tons are expected
to trade early in the month as mills dont want to inflate
year-end inventories and scrapyards are content to hold off in
hope that January will deliver stronger numbers.
Chatter of an early 30,000-ton
sale in the Northeast at down-$10 has made its way through the
rumor mill but the talk is unsubstantiated, according to volume
buyers, including mill buyers and brokers.
There also is an expectation
from some sources that December could be one of those rare
two-tiered markets where a second round of prices is struck for
January delivery before the year draws to a close.
"I think the January buy
eventually gets pushed back to late December. Week one in
December will not be the full buy and we will see more
transactions as we get closer to Christmas for January
programs," an Ohio broker said.
Lisa Gordon, Pittsburgh,
contributed to this story.