Ferrous scrap prices for prime grades in the Midwest are likely
to trade sideways in August, with obsolete grades and shred
expected to come under a little pressure, according to early
Most market sources
suggested that scrap prices on all grades will stay mostly
unchanged from July levels, while only some sources speculated
that shred and cut grades could trade about $5 to $10 per gross
ton under July prices.
A few sources said
shred could lose some ground, given the volume on offer after
Julys buying programs concluded, but one Chicago-area
dealer said he was confident the market would trend sideways
after concluding an early sale for August to an area mill at
prices unchanged from July.
Other large suppliers
and consumers agreed.
"I see it sideways for
August. I dont see a reason for too much change," a
source at one large supplier said.
A few mill buyers
agreed. "I am expecting a sideways market at this point. Supply
and demand seem to be in relative balance," said one buyer,
while a second said he expects only prime grades to trade
"The Chicago market
looks flat for prime (and) flat to down slightly for shred. The
Cleveland market looks down $5 to $10 on prime (and) down the
same on shred. (It appears) down because some big consumers
will hopefully get their inventories under control," the second
mill buyer said.
Some suppliers said
they expect demand from flat-rolled producers to be similar to
the strong demand recorded in July, with demand from long
product and plate manufacturers expected to be weaker.
Margins are good on
long products, but lower production rates could result in
layoffs at some long product mills running at under 70 percent
of capacity with the exception of specialty bar producers, a
second supplier source said. "Six mills in the U.S. are still
buying or trying to buy today at sideways. Two have paid up
money for fast performance. This is taking 10 percent of August
scrap off the market."
The mills are not
necessarily buying scrap for August consumption, but because it
is possible they are running better-than-planned production
schedules or did not buy enough scrap earlier in July, he said.
"But it has (the) same effect on (the) market because mills are
pushing for dealers to sell and ship scrap on the 22nd of a
month, which is unusual. It creates tightening," he said.
A third supplier
source said prime grades were poised to trade sideways and not
above July levels because any supply loss from stamping plant
shutdowns would be offset by the strong flow dealers recorded
One broker in the
region said it appears that there is an overhang of shredded
scrap in the market which could be a drag on the entire scrap
market in August. "It appears primes remain somewhat in balance
to tight while frag (shred) and cuts appear to be in plentiful
supply. Dealers held scrap in late May and early June waiting
for the rally and they got it in July. A lot of scrap was sold
and is shipping. I am not convinced all of that scrap will
again be available come August, however," he said.
producers are still running strong, some market participants
are concerned that imports could adversely impact the market
later this quarter.
have been successful with price increases. However, we are
concerned with flat-rolled sales being challenged by Asian
imports. Higher U.S. prices are very lucrative to them,
especially if our currency remains strong," a fourth supplier
A few dealers said
that any talk of weaker shred or cut grade prices could be
offset by an improving export market.
"I feel no reason for
any downward movement, given some export action, restricted
supply and stable demand. Ive heard some dealers
positioning for an up market, but Im skeptical that will
happen until September or October," a fifth seller said.
southern market could weaken in August as production
disruptions in Mexico and an outage at one domestic mill will
improve supply, a mill buyer in the South said.