NEW YORK An
oversupply of scrap relative to anticipated demand will likely
send Texas ferrous scrap prices down in February, according to
cited weak demand from domestic mills and exporters as the main
drivers of their bearish outlook for February.
Most sources contacted
by AMM speculated that prices will drop between $10
and $30 per gross ton from Januarys transaction levels,
with prime scrap expected to drop more than obsolete scrap.
Reasonable scrap flows into dealer yards through January likely
will mean more supply than demand, sources said.
"Many shredders have
dropped their prices by $30 during January. Flow is average at
best. Demand is not good for many domestic mills and Mexico is
basically out of the market," one market participant said.
A second source said
his company had recorded normal January scrap flows into its
yard but shipments to mills had been affected by logistical
issues. "Outbound logistics have been horrible. Rail car supply
on (two railroads) is terrible. Truck and barge availability is
spotty as well, so shipments to mills arent as strong as
one would think," he said. "But there are certainly negative
thoughts about the February market moving down and mills
Recent moves by
regional shredders to drop shredder feed prices have
contributed to the bearish sentiment in Texas, several sources
"My outlook for
February is that if you were lucky enough to get up numbers in
January, you will give it back in February. In other words, I
am betting on being back at December levels," a third market
Shipments of scrap
booked in January into some steel mills hit a roadblock as
dealers reported unloading times of anywhere between five and
14 hours at mills receiving yards.
"Our trucks of heavy
melt scrap are waiting an average of 14 hours to get unloaded.
The mills have announced that regardless of the delays, all
orders will be canceled come 5 p.m. Jan. 31," said a fourth
source, who said this was his indicator that prices will drop
Sources said mill
demand is expected to be dismal in February, based on reports
that one mill did not receive scrap for at least six days in
January due to an oversupply from dealers.
The lack of export
sales also has hurt the market, sources said.
"Houston is just
really pitiful for sellers. There is no export. Docks dropped
pricing $20 to $25 from December and, in spite of the season,
scrap flow is the highest at docks since August," a fifth
Limited purchases by
mills located closest to Houston, no Mexican demand, difficulty
in securing barges, and no support from Arkansas mills for
prime and shredded scrap were hurting dealers, he said. "While
pricing is higher up north, you cant get rail cars or
barges to sell there so it is moot. Markets are very
disconnected. Unless export steps in and supports the market
soon, it will continue to deteriorate here."