MONTERREY, Mexico Early
speculation about domestic ferrous scrap pricing points to a
sideways-to-marginally-down market in February as participants
wait for better cues on mill demand and scrap flows.
More than half of the
respondents to an AMM survey of buyers, dealers and
brokers said they expect a sideways-to-down-$10-per-gross-ton
movement across various regions, while another 25 percent said
the market could decline between $10 and $20 per ton.
Only a handful of sources said
the market would show a strong sideways-to-up-$10 trend.
Sources said that price
movements likely would be region-specific, with some areas such
as the Ohio Valley expected to show a tad more weakness than
"Supply is good on prime
(grades) and shred. I expect Cleveland pricing to be down $10
to $15 (per ton), with Chicago probably similar," a buyer for
one steel producer said.
A buyer for a second steel
producer offered an early read that fell outside of the general
speculation. "Our feeling so far is down $20 (per ton) on
primes and a bit more on shred," he said. "Demand for finished
product is soft, and our order book was revised down twice in
the past 10 days. It would be great if the (steel) price
increases stick, but given that (one major steel producer) has
not announced, and also, based on what we are hearing from our
salespeople, customers arent believing it."
However, a buyer for a third
producer said that current signs indicate a sideways-to-up
trend in February. "Overall, supply meets demand," he said.
"Primes are in oversupply to obsolete. Utilization is sideways.
Short lead times are a sign of cautious demand. Nonexistent
exports on the Gulf and East coasts could pressure scrap
prices, but hot-rolled coil price increase announcements and
lower scrap collection due to cold weather in the Midwest
"Things are looking somewhat
softer, but thus far not significantly," a fourth market source
said. "Demand seems mixed, with flat-rolled still good but long
products less so." Two Ohio Valley mills are making smaller
buys, and a third Ohio Valley mill has some increment of home
and buyback coming at it that will lessen its participation, he
said. "This may result in mid-Ohio being a little weaker than
other nearby markets."
Chilly weather slowed inbound
scrap flow to yards by about 20 percent last week, the fourth
market source said, but scrap is just pent-up and will break
loose on the first 40-degree day.
In the Midwest, several sources
reported weak scrap flows due to cold weather, which led at
least one seller to speculate on a stronger February
"We have seen colder weather
kick in that caused a drop-off in already-meager scrap
receipts. Now, the sheet producers have seen a pickup in the
order book and increased coil prices by $50 per net ton," he
said. "With demand picking up a bit and less total scrap
available, this Midwest market should be susceptible to a price
increase. I would not be surprised if some scrap is already
being traded in quiet deals at higher prices."
Most other Midwest sources,
however, said that current talk has the market pegged at
anywhere between sideways to down $20.
"Demand is mixed; some mills
need scrap and others do not. SBQ (special bar quality) bar
mills are down and will not need as much scrap, (and the) same
is true on structural and rebar," one broker said. "Sheet mills
are the only shining spot, with auto doing well."
One large player in the Chicago
area said weak scrap flows in the central Midwest have
accompanied slow demand from mills. "Without the pressure from
the East, I think this market would be sideways," he said. "The
South is tighter but will benefit from warmer weather
One consumer in the Mid-Atlantic
region said the market appears to be down $10 to $15 per ton
and heading lower. "Current inventory position is exactly where
we planned to be in early January, based on beginning
inventory, consumption and receipts," he said. "At this point,
(it) appears that sufficient inventories should be available to
satisfy requirements at projected downward pricing."
Some suppliers in the region
said a recent decline in export prices would support that
theory, but one seller offered a different view. "Supply of
obsolete grades is OK, but demand from mills and exporters also
remains strong," he said. "I expect the market here to be
sideways at least and maybe up a little. The Ohio Valley and
Midwest do not appear to be as strong, with less finished steel
demand and OK scrap flows."
In Texas, one source said that
he expects mill prices to be sideways to slightly up. "We have
made a recent push to bring (scrap) inventory levels up and are
currently paying a hefty price for peddler materials coming
in," he said. "We have noticed a slight pullback in flow from
our industrial customers."
Most shredders expect the market
to go sideways to perhaps down $10 for those "that did not get
a drop in January," a second Texas source, noting that "some
sold late and had to take a cut of $10. All hope that demand
picks up next week and it is up $10 to $20, but it does not
In the Southwest, a market
participant said there is still price competition with exports