NEW YORK Steel mills in the Detroit region have concluded the bulk of December scrap trade at the same price levels recorded in November, a trend some say suggests other regions could also see flat pricing when their markets settle later this week.
The monthly scrap dance began Tuesday morning in Detroit after negotiations and small-volume trading in several pockets of the country pointing to a sideways domestic market. Though consumers in Detroit were noncommittal during the first half of the day, buyers entered after lunch with sideways numbers after sellers resisted any push down, a number of sources said.
"There was some posturing. Negotiations went a little bit back and forth, but larger dealers in the area said they werent selling anything if it wasnt flat. So buyers accepted sideways," said a source at one Detroit mill.
A source at a second mill confirmed that buyers left prices flat despite sensing a weakness in the market.
"I think the markets a little bit weaker than sideways. Supply continues to drive this market. Theres enough prime out there to meet demand or exceed it. But No. 2 frag (shred) is propping up the market," he said.
Meanwhile, other regions are expected to develop and possibly settle Wednesday, according to sources.
Market participants said steel mills in the South were among the first to open talks with suppliers this week in the hopes of securing tons by rail as barge logistics along the Mississippi River remain a concern (amm.com, Nov. 28). Buyers in the South reportedly offered firm sideways numbers with no attempts to claw back by a few dollars.
In other regions, however, some buyers are still hoping for lower prices this month.
In the Ohio Valley region, for example, the market could trend a few dollars under November levels after a source at one mill indicated it had made some buys on shred and No. 1 heavy melt at $5 per gross ton below Novembers levels. Though a $5 decrease is still largely considered a sideways market, it is the first sign of transactions below last months levels.
Some mills are said to be targeting lower prices in Chicago as well, although whether that proves to be the case when the market settles remains to be seen.
"Chicago is trying to trade down $5 due to the fact shippers cant get on the river," said a fourth source. "Export is weaker and December demand is weaker, so dealers will ship some scrap at sideways, but January promises to be better."
A fifth source suggested steel mills in the Chicago region did not trade on Tuesday because one major Midwest consumer remained silent in the hopes of better pricing ahead.
"(The consumer) is doing the usual and going underground as they sense some weakness and feel the longer they wait, (the more) dealers will end up selling down. Thus other mills are all doing the same," he said.
"Nobody seems to be in a hurry to do much, although quite a few suppliers have asked for to-be-determined orders in order to keep shipping," said a sixth source, based in the Midwest. "If the market ends up sideways, the dust should settle pretty quickly. If the mills push hard for down money, things could get drawn out."
However, a source at a mill in the Chicago region said he would be "shocked" if mills succeeded in lowering tags for December.
"I dont think there will be a significant move in any direction. I would be shocked if anyone was successful at driving it down $10," he said. "Any type of real aggressive move down will dry up tons.
"Some people will be in the market for larger packages, so theyll be happy at going sideways and getting it done," he added. "Frankly, sideways is good. I dont see many buyers being upset with that."
One supplier agreed a sideways market would be a fair compromise for December.
"In my experience, if theyre a little unhappy and Im a little unhappy, then its a fair market," he said. "So it will go sideways. This is the biggest nonevent of the year. From January to now, there was so much volatility. And the biggest news to come out of December is that nothing happened. And Im happy about that."