Midwest ferrous scrap prices are expected to increase up to $50
per gross ton over the course of the winter, with November
likely to kick-start the push for higher prices.
said seasonal tightness in scrap supplies, strong mill demand,
finished steel price increases and an uptick in export prices
will be the main drivers of scrap prices through the
speculated that a $40- to $50-per-ton increase over the next
two to three months likely will come in a minimum of two
installments, with the first expected in November.
Several Midwest mill
buyers estimated that scrap prices in November could rise
between $10 and $20 per ton from this months levels,
while suppliers were divided between speculated increases of
$10 to $20 per ton and $20 to $30 per ton.
polled informally by AMM suggested that supplies of
cut grades such as heavy melt and plate and structural will be
far tighter than shredded and prime scrap.
Midwest suppliers said
flows of scrap into their yards have been within single-digit
percentage point increases or decreases from flows seen last
Most suppliers and a
few mill buyers said that despite November being a shorter
shipping month due to the Thanksgiving holiday and expected
outages at a few mills, demand will be more than sufficient to
support higher prices.
"(Outages) would be
the mills last line of defense. Basically, the outages we
have seen came in summer and fall and most of those mills are
coming back. All hope on the consumer side is lost. They have
no line of defense. They will say inventory, but
good luck with that," a buyer for one steel producer said.
A second buyer agreed.
"There are some outages, including our location for the last
week of the month, but I think there will be enough demand that
it will cause prices to push up some. The supply base will
typically hold back tons this time of year if they think the
first quarter is likely to be stronger," he said.
Although some market
participants said prices could increase by as much as $30 to
$50 per ton in November itself, many suppliers said they hope
the big spike occurs over time and not in a single month.
"I really hope
its not up a full $50 in November. Im hoping we see
$20 to $25 increases in November and then go for another up in
December or January," one supplier said, while others suggested
that any large spike in November prices could force a
correction in December as year-end accounting measures kick
At least one supplier,
however, felt that prices should rise by at least $40 in
November. "We expect overall volumes to be the same as
September, which is not good. We have low on-hand inventories
and ... flows are drastically reduced from August levels.
Compounding the situation, dealers are anticipating higher
prices in November, so margins are more compressed as the buy
side has increased $10 to $20 to maintain flows," he said.
"Scrap prices must come back up, hopefully, to bring supply in
One trader expects
Midwest prices to trend above the markets to the east. "I hear
the discussion about strength in some regions, but most seems
west of Pittsburgh and eastern Ohio. My sense is strong
sideways in Ontario, Pittsburgh and Canton. (There is) too much
scrap in the region from Toronto and Hamilton southward to
Pittsburgh, west toward Mansfield," he said, adding that he
doesnt expect any uptick in demand from most buyers in
Others suggested that
markets in the South and Southeast also could record
strengthening prices in November.
"The Mexico market has
prices in the South pushing up strong. One (mill was) nervous
that the market would spike $30 (per gross ton) due to
south-of-the-border buys," one supplier to the region said.