Uncertainty over scrap supply and a push by producers toward
higher steel prices have reversed sentiment in the Midwest,
with market participants now speculating that October scrap
prices will likely stay unchanged for obsolete grades.
Sources said they
expect Chicago to be the strongest Midwest market, with most
speculating that prices will trend sideways on most grades
except shredded scrap and the prime grades, which could slip a
Several suppliers said
mills didnt cancel orders at the end of September, which
the market reads as an indication that mill buyers either have
stronger demand or that prices are at or near bottom.
With the consensus
view ranging from sideways to down $10 per gross ton from the
prior months levels, the only division among suppliers
was to which end of that range prices will move. This is a big
reversal from speculation up until the weekend that had the
October market pegged at down $10 to $20 per ton.
"I am expecting a
sideways market at this point. I know that early sentiment was
softer, but given the demand I dont see that happening in
Chicago. Tons from the West are harder to come by and demand
for cut grades is up vs. supply," one mill buyer said.
"There certainly is
still a possibility of a sideways market, rather than off $5 to
$10. If anything is going down it will be shred," a second
were torn between a sideways market or a market thats
down $10 per ton.
"As far as October
goes, I have had several brokers for the last two weeks asking
for shred, cuts, plate and structural, and prime. We also have
open September contracts with no cancellation notices. Right
now, I am calling it sideways in the Chicago district. Some are
already saying up a few dollars," one large supplier source
"Scrap has not been
flowing in our area and we are coming into winter mode. In a
rising market it is much harder to buy since it only makes
scrap guys feel it could go higher and they hold back
However, another large
supplier felt prices could lose a little ground. "I think the
market will be down $10 across the board in the Chicago area. I
think it is the bottom of the market and mills will look to
stock up. All offers I am getting are down $10. I think I can
pick some mills off at sideways, but they are holding firm," he
A third supplier said
that despite fresh speculation that prices for shredded scrap
are likely to fall by about $5 per ton, he anticipates a far
weaker market for shred.
"This market seems to
be driven down by the mills as usual. Some mills have less of a
buy, some will have some down time, some buying less to get
inventories down. All not good news. It is too early to really
know, but mills are trying to come out now," he said.