AMM.com Copying and distributing are prohibited without permission of the publisher
Email a friend
  • To include more than one recipient, please separate each email address with a semi-colon ';', to a maximum of 5


Texas scrap market seen bearish in February

Keywords: Tags  scrap, steel, ferrous scrap, prime scrap, obsolete scrap, Sean Davidson


NEW YORK — An oversupply of scrap relative to anticipated demand will likely send Texas ferrous scrap prices down in February, according to early speculation.

Market participants 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 January’s 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 aren’t as strong as one would think," he said. "But there are certainly negative thoughts about the February market moving down and mills canceling orders."

Recent moves by regional shredders to drop shredder feed prices have contributed to the bearish sentiment in Texas, several sources said.

"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 participant said.

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 in February.

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 source said.

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 can’t 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."


Have your say
  • All comments are subject to editorial review.
    All fields are compulsory.



Latest Pricing Trends

AMM Events