Shredder feed prices in the United States' Midwest and Southeast are stable ahead of March ferrous scrap trade, in line with expectations that domestic scrap prices will hold their ground next month.
There is a good chance that the March market will be two-tiered, with prime scrap likely to perform better than secondary scrap grades, market participants said. Prime scrap supply appears to be tight due to a slowdown in the automotive sector.
"The market is firming up nicely. Demand is really good, mill order books are in place and export has bounced off the bottom. I'd say today the market is a strong sideways," a shredder source in the Midwest said.
Supply dynamics appear to be mixed in the Midwest. The shredder source in the region said flows remain strong despite the February price drop, but a second shredder source in the Midwest has seen flows decline compared with January.
"Our flows have been off all month. Even though the market is expected to go sideways or up I am not going to raise prices. We need a bigger increase in order to get people excited," the second Midwest shredder source said.
A shredder source in the South who is also expecting a "strong sideways" market next month kept scale prices steady because it doesn't appear that higher prices will be able to draw more scrap out right now.
Scale prices were also steady at auto shredders in the Midwest and Southeast leading up to Monday February 24.
Fastmarkets' price assessment for steel scrap shredder feed, fob Midwest and fob Southeast were both unchanged week on week at $121.90 per gross ton and $117.60 per ton respectively.
Shredder feed in the Ohio Valley, however, increased by 2.3% week on week to $119.49 per ton from $116.82 per ton, according to Fastmarkets' assessment on February 24. Three shredders raised their buying prices by $11-15 per ton last week following a recovery in the export market.
Ferrous scrap export prices to Turkey have risen by $20 per tonne from early February levels, with the most recent bulk deal transacting at $278 per tonne cfr for an 80:20 mix of No1 and No2 heavy melting scrap.
Fastmarkets' shredder feed assessments are based on peddler prices, which are lower than prices for dealer loads.
A seller of shred feed in the export and domestic markets said exporters on the East Coast are paying $145-155 per ton fob dealer yard, which is comparable to what he is getting from a shredder in the Ohio Valley region.