NEW YORK Steel mills in
Chicago, northwestern Indiana and St. Louis have begun scrap
negotiations for June, with early trends following those set by
Detroit earlier this week (
amm.com, June 4).
Midwest market participants
outside Detroit said they expect markets to settle by June 6,
as some large producers had yet to complete their buying
programs as of late June 5.
Those Midwest mills that have
already traded have for the most part accepted unchanged prices
on prime grades such as No. 1 busheling, with shredded and
obsolete scrap grade prices reported anywhere from flat to down
$10 per gross ton from May. There were more reports of drops of
around $10 per ton on cut grades and shred than reports of
A buyer for a Chicago-area steel
producer that has completed its buying for June said obsolete
scrap was easy to get at down $10 per ton. A buyer for a second
producer confirmed the trend.
However, with some large steel
producers still in the market, a few sources suggested that
some obsolete scrap volumes could still trade at stronger
prices than earlier deals. "It looks like your last sale will
be your best sale," one source said. "This market is improving,
and it looks like weve established the bottom of the
According to several market
sources, a number of Midwest mills have increased their buying
programs by 10 to 15 percent to better prepare for July.
"I think most all mills are
attempting to purchase at least projected June melt rate plus
10 to 15 percent more in anticipation of less scrap
availability and shortened ship days for July," a second source
A third source added that market
sentiment had changed from earlier down-$20 forecasts due to
poor scrap flows into several dealer yards in May.
Outside of the Midwest, June
negotiations continue in Pittsburgh and the Ohio Valley, with
several sources indicating that prices could remain unchanged
from May when the dust settles. No markets in the region had
settled as of late June 5, but deals into Cleveland, Pittsburgh
and Cincinnati were reportedly being concluded at mostly
Cleveland mill buyers had
initially expected the market to be down $10 a gross ton, but
supply-demand dynamics could keep it flat, sources said. Two
Cleveland mills have hefty buys totaling around 200,000 tons,
but there may not be enough scrap to feed the demand, sources
"Dealers will not be afraid to
play hardball this month, as they appear to be more confident
in the market than they have been in a while," an Ohio scrap
processor said. Instead of accepting lower numbers, some scrap
processors may hold on to their inventory in hopes of getting
better prices in July.
"Mills (are) trying to buy down
$10 and scrap sellers (are) asking for sideways," a broker with
a national presence said, adding that he expects most markets
to settle by the end of the day June 6.
In the southeast, Birmingham,
Ala., remained unsettled June 5 as mills continued their quest
to buy scrap at a discount to May. "Some dealers are showing
resistance while others are caving in," a southeast broker
Lisa Gordon, Pittsburgh,
contributed to this story.