NEW YORK U.S. ferrous
scrap prices could drop anywhere between $10 and $20 per gross
ton in April, depending on region and grade, according to early
speculation in the industry.
Although most sources said there
has been no real activity, some mills reportedly have concluded
early trades for low volumes of plate and structural scrap and
shredded scrap in a down $10- to $20-per-ton range.
Market participants said they
expect most major steel mills to come forward with bids by
April 2 or 3.
With many predicting an April
price softening, several Midwest mills reportedly have cut back
on pending March orders in hope of buying material cheaper in
just a few days time.
Meanwhile, many suppliers said
they will fight moves to drop prices by more than $10 because a
bigger decline would shut down scrap flows in the Midwest,
which remained tight despite large price increases in
A general belief mid-March that
many suppliers possibly committed more tons than they could
delivercalled a paper saleappears to have proven
only partially true (
amm.com, March 14), with some regions experiencing
better scrap flows than others and sources both at mills and
scrap companies reporting the paper sales werent as bad
as previously imagined.
"I think in the east, Pittsburgh
and Ohio, the shipments were good enough, but some paper was
shipped. I do not think as much paper was sold as what was
projected. As you move further west, maybe shipments were worse
into (a Chicago mill) for example," said one source.
A second Chicago source said
mill receipts appear to have been slow in March, but it was
"more related to lack of flow into shredding yards."
A third source said one Midwest
steel producer stated in the past week that it expects to
receive 70 to 75 percent of what it bought for March, while a
fourth source pegged paper sales at 30 percent, up from a
monthly norm of about 15 percent.
The slight decline in actual
deliveries in March could force some mills to step in early
during the first days of April as they look to cover a possible
gap in material.
"I think there is some unshipped
material, with the flow being less. I think the cancellation of
orders could cause a gap in shipments. That is why I think the
mills will have prices early in the week. Also, rail car
availability is not the best right now," a fifth Midwest source
"(Due to the cancellations), it
does look like ferrous is off some. Mills (are) said to be
looking for down $30; dealers (are) looking for sideways to
down $10," he said. "Around here, scrap inflow is the lowest in
the past 24 months. Its really hard to accept down
anything. However, with steel mill production mostly flat and
lack of export scrap sales, it might not take long to get
supply ahead of demand. I just dont think that is the
case yet for early April."
One broker speculated that the
drop may not be as large as others are forecasting, despite
weak export demand, precarious flat-rolled steel prices and
drifting demand for finished product.
"Scrap is tight, demand looks
weaker and this market is trading pretty thin. I would hate for
everybody to go into this and think the market is down and it
really is only down $5 to $10," he said. "Many mills are
canceling so there is a bit of a negative bias, but I am not
sure today dealers are going to participate early at down