NEW YORK 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 few dollars.
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 consumer said.
Suppliers, however, 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 said.
"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 tons."
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 said.
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.