Shredded scrap prices in the Midwest appear to be precariously
poised for September trade as early speculation points to a
Early trades of
shredded scrap in the Detroit region at about $10 per gross ton
lower than levels fixed for August tied in with market
speculation that shred prices could trend as much as $10 lower
depending on the Midwest location, with Detroit expected to be
The consensus view
from nearly 75 percent of sources polled informally by
AMM suggests that cut grades could falter a
littlealthough not by the same amount as shredwhile
prime grades are expected to trend between sideways and down a
little. Most sources speculated that steel mill demand will be
similar to August, if not a tad better, in most Midwest
markets, barring a possible drop in the Detroit area.
participants summarized their speculation for next weeks
trading as "soft sideways" and "sloppy sideways."
A mill buyer in the
Chicago area said he doesnt expect the Chicago market to
ape Detroit. "I cant see Chicago being down much. Some of
the other districts have been paying some premiums over the
Chicago market, so maybe there may be some adjustments there.
Still, it feels like more of a sideways move," he said.
A second buyer in the
same region said trading should start in the middle of next
week. "(My) outlook is primes sideways to down $10, shred down
$10 or more. I do not expect shred to go down less than prime,"
Meanwhile, a market
participant in Detroit said there appears to be a lot of scrap
on offer in the area, reporting shred trades at down $10 and
cut grades down $5, with at least one mill buyer pushing for an
additional $5 down on cut grades.
A second source in the
Detroit area said dealers were hoping for a sideways to
soft-sideways market. "The disparity between busheling and auto
frag (shred) is huge. ... Auto frag seems to be the one item
that remains plentiful right now. Really, it is too early to
make any predictions because things are very quiet," he
A seller to most key
Midwest markets said shred outlook is weak due to a good supply
of shreddable material into dealer yards. "Inbound flows for
shredding have been good the last two months, so the supply is
there," he said.
dealer said any price move in Detroit would serve as more of a
correction. "I still think the Detroit weakness is attributed
to the extra strength shown there in July. In other parts of
the Midwest, deliveries to processors are still spotty.
Overall, total tons are still depressed from 2011-12 levels. I
have heard of scrap processors that in early August tried with
little success to lower prices by $20. Eventually, margins have
to be built into prices," he said.
Other dealers said any
push by mill buyers to drive down prices more than what
qualifies as "soft sideways" would meet resistance.
"Shred is already
trading lower than plate and structural, and it looks like
there will be good demand in the Midwest for September," a
third dealer said.
Sources said cut
grades are expected to perform better than shred due to tighter
"Cut grades are still
in very short supply. Maybe thats because the shredders
are shredding those grades vs. torching and shearing, and that
is also adding to the slight overhang of shredded. Material in
the upper Midwest will thin out as the farmers get ready for
harvest," a source at a large regional shredder said.
Only a small portion
of sources polled speculated that prime grades could move in
tandem with shred, with most pointing to a flat market on a