NEW YORK Ferrous scrap prices in U.S. markets are likely to trend sideways or record a minor uptick in December, according to market participants.
Most market players surveyed by AMM said scrap prices in the Midwest and other regions are likely to either stay unchanged or increase up to $10 per gross ton from November.
Significant movements, they speculated, would come around the turn of the year.
Many suggested that mills likely bought additional scrap volumes in November to cover some ground for December, putting a damper on any efforts to push for big increases.
Scrap dealers said they would hold on to scrap volumes in the hope of a big increase in January or February.
Less than a quarter of the market sources contacted by AMM felt prices could increase $10 to $20 per ton, due to possibly stronger demand from some mills, tighter scrap flows and dealer resistance to low prices. For the most part, though, market participants said December is poised to be a month of marginal movement.
"I would say the weakness in East Coast exports will help keep the scrap market in check for December. (There also is) some weakness in recent sheet hikes. I believe there are already some rumblings of price increases not sticking, so I think that has kept a lid on enthusiasm for December," a buyer for one producer said.
A majority of the market sources said scrap price increases in November failed to spark any meaningful increase in flows into dealer yards, and they were divided on whether scrap dealers and brokers will be able to fulfill all the orders they booked for November delivery.
Nonetheless, most sources conceded this would do little to dramatically lift prices in December, with mills buying for a shorter production month and dealers holding back for January and February.
"I see no reason for a price increase as it wont pull any more scrap, but it sure looks like it will be moderately stronger," one dealer said.
A second dealer said decreased supply will match the perceived decreased demand. "I also think the mills tried to buy through the first week of December. That will only give them the need to buy for two to three weeks in December with those outages," he said.
A few others, however, advised caution.
"I think any Midwest-area mill faced with winter not far off should have concerns about scrap supply unless they have demolition jobs going on in their backyard," said one dealer, citing poor scrap flows this month.
"Mills are not out of the woods yet. They are motivated to keep the threat of rising raw material costs higher as a weapon to stabilize their price increases and steel margins, which are huge," a trader said.
Should December indeed trade at sideways to up $10 per ton, many suggested that it would set the stage for a $20 to $30 increase in January or February.
"As we know, December starts to be January around the 15th. If the dealer sniffs another pop they will hold and we could break out in January at up $20. Steel has too much momentum right now, price increases are sticking ... a flat market sucks the (life) out of the steel market in my opinion," the trader said.
In Texas, most sources reported extremely poor obsolete scrap collection but said that, like their Midwest counterparts, they expect to receive meaningful increases over the next two months and not necessarily all in December.