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 smaller drops.
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 market."
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 said.
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 sideways numbers.
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 added.
"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 said.
Lisa Gordon, Pittsburgh, contributed to this story.