NEW YORK Ferrous scrap trading got off to a slow start Sept. 4 as buyers in several regions tested waters with low bids that suppliers resisted.
Market participants in the Midwest, South and Mid-Atlantic said they expect the bulk of the trading to be completed Sept. 5, although the overall sentiment was a tad more negative than it was at the end of August.
Sources said that several Midwest buyers are attempting to take cut grades down $10 per gross ton this month, with a push to take shred and busheling down by as much as $15 from last month. This is in stark contrast to pre-trading speculation that pegged the Midwest market at down $10 per gross ton on shred and sideways on most other grades.
"At this point Im hoping Chicago settles at down $10 on the cut grades and primes. I say that because I feel it could be a little sloppier," one Chicago-area dealer said. "For some reason buyers are backing off primes. Some mills are complaining about steel prices. All of a sudden their demand has fallen off. Some mills have outages. Some mills are taking down inventories for year-end."
One Chicago-area mill that reportedly bought a small volume of shred at sideways prices in late August to cover a shortfall after suppliers failed to fulfill shipments has reportedly released bids at down $10 per ton on grades such as heavy melt and turnings and down $15 on shred and busheling. However, no transactions have been confirmed yet at those levels.
A second market participant said the lack of prime scrap demand from the Ohio Valley could impact the Chicago and Indiana market should prices in Chicago hold at previous levels.
"Busheling could get pushed down more than any other grade. There seems to be a lot of it around. (One major producer) seems like theyre going to get their whole needs from their own scrap company, which will put a lot of pressure on dealers in Cleveland and Detroit. If you take this producer out of the equation, youve got only two other big buyers for prime this month since the Ohio Valley will not be buying much," he said. "If Chicago shows any strength, the Detroit boys will dump 30,000 tons of prime scrap into Chicago and Indiana."
In Detroit, a few sources said that small volumes of scrap for September traded at down $10 per ton on heavy melt and prime grades and down $15 on shred and plate and structural. The bulk of it is expected to trade Sept. 5, when the regions two largest buyers are expected to start buying.
Although most sources continued to talk of weakness in the shred market, a lone voice insisted that shred would settle sideways or possibly better in the Midwest because some buyers were "stretching outside their typical locations for shred." However, every other source AMM contacted dismissed this notion and said shred is almost certain to lose some ground in September.
In the Ohio Valley, a buyer for one mill said there was no sense of urgency to buy because he expects the market to only get weaker as time passes. The only positive for the region is the end of a labor strike at a mill in Canada that will trigger some restocking, another source said.