PITTSBURGH An ample supply of raw material, mediocre
mill demand and bearish mill buyers could lead to a drop in
scrap prices for February, according to scrap brokers,
processors and mill buyers.
Brokers at mill-owned scrap assets are sending mixed signals to
their customers. Weve received some January order
cancellations and some have been left open. Yards dont
have large inventories and mill demand remains constant,
a seller into the Midwest said.
In Chicago, numerous integrated and electric-arc furnace (EF)
mills have executed their right to end-of-month
cancellation rightsa clear sign the market will
retreat, sources said.
We saw cancellations from mills across the board, which
is pointing the market (downward), but it does appear to be a
soft sideways, said a Chicago broker. The talk is
the mills will come out and try for down $20 (per gross ton)
but will settle at better prices if there is resistance and
enough of us choose to hold our tons.
I was wondering if snow would impact (the) market, but it
doesnt look this way, a Chicago scrap processor
said. The market looks poised to go down $10 to $15 (per
ton), and if mills try to pull it down too much to $20, there
will be resistance from sellers. The processor noted that
cut grades are in tighter supply than prime scrap and shredded
The Chicago broker said his firm will minimize its sales of cut
grades this month because it doesnt believe it can cover
a huge order. The tightness in cut grades could work to
artificially help some of the other prices, the broker
I see the market down $20 to $30 (per gross ton) this
month. There is very little demand and a more-than-adequate
supply of scrap, according to an Ohio mill buyer.
Expectations in the Ohio Valley have been dampened as Canadian
scrap becomes available to the region, a recycler supplying
Ohio mills said.
The same scenario seems to be establishing itself in Detroit,
where the market is expected to settle Tuesday, with
expectations that the price will be down $20 a gross ton. One
Detroit mill exercised its end-of-month cancellation rights but
will be in the market hoping to buy at lower numbers, according
to one of its suppliers.
Early shredded scrap sales into the Philadelphia market were
down $15 and $18 a ton, but this area is expected to not drop
as much as other cities due to an active export market.
One mill entered the Philadelphia market on Tuesday afternoon
and secured heavy melting scrap down $10 a ton, shredded scrap
down $12 a ton and No. 1 busheling scrap at an $8 discount to
If mills come in and buy at down $10, I think they will
get what they need, and our buyers think they may be able to
take the shred feed prices down to match, said a supplier
into the Philadelphia market. At down $20 (per ton), we
will not be able to replace tons sold, so we may sell some at
down $20 but will not sell everything.
Prime scrap in the neighboring Cincinnati market was down $15 a
ton Monday when compared to January.
In Birmingham, Ala., early sales of shred and prime were down
$20 a ton, with one mill offering to buy at down $30.
In Houston, players are divided, with some calling the market
down $10 per ton and others believing it will fall more.
Shredders in Houston are paying down $20 (per ton) on
shredder feed. Last week, the mill was talking sideways to down
$10, but now I suspect they will try and take it down
$20, said a supplier into the Southwest.