Ahead of the August ferrous scrap trade, the dominant theme in the market has been a continued emphasis on lowering prices for prime grades, with some steel mills pushing for a $30-per-gross-ton price cut while dealers have balked at the steepness of that suggestion.
At the same time, price trends for secondary grades such as No1 heavy melting scrap, shredded scrap and plate and structural scrap appear to be steady, with some sources indicating that upward corrections are a possibility.
“One [Midwest] mill is holding out the carrot and trying to buy down $30 a ton on busheling because they don’t really need it, but dealers want to hold the drop at down $20 a ton, so we will have to wait and see what happens,” one seller said.
In July, Fastmarkets’ price assessment for steel scrap No1 busheling in Detroit dropped by $40 to $275 per ton, and some sellers suggested that they will hold back tons if the price drops by more than $20 per ton in August.
While a price drop for prime seems inevitable, prices for secondary grades are expected to move sideways in a worst-case scenario - and may even move higher this month.
“My agent told me there is strength in cuts and shred into Detroit and Indiana, and they might see it go up. So [the market] seems sideways but could have some legs to it,” a seller into Detroit and Cleveland said.
Prices for cut scrap also appear to have upward momentum in the Philadelphia area.
Fastmarkets assessed the price for steel scrap No1 heavy melt, export yard buying price, delivered to yard Philadelphia at $205 per gross ton on Monday August 3; that price is up by $5 compared with the price for steel scrap No1 heavy melt, delivered mill Philadelphia, which fell to $200 per gross ton in July.
Domestic scrap typically sells at higher prices than export material due to its higher quality, and Philadelphia mills will lose tons to the export market if they do not raise their offers, a seller into Philadelphia said.
In Virginia and the Carolinas, mills have been feeling the competition from Turkey. Steelmakers from that country have booked at least 568,000 tonnes of scrap specifically out of the United States since July 1. Mills in that area have been aggressively looking for material, and some have stayed open on Saturdays to accept shipments of secondary grades.
Shredders that have the option to sell into the export market also have raised their prices significantly in an effort to draw out material.
One Southeast shredder doubled its buying price for shredder feed to $160 per net ton from $80 per net ton.
Fastmarkets’ price assessment for steel scrap shredder feed, fob Southeast increased to $100.80 per gross ton on August 3, up from $89.09 per ton a week earlier on export strength.
“There is good demand and they need scrap in the South, and there is a lot of pressure from dealers on the mills to get better prices [than sideways] on obsolete. Industrials are running strong and generating busheling, while obsolete [production] is only at 60%,” a seller into Alabama said.
A second seller into Alabama said that the market has been experiencing a fundamental shift, with operating rates continuously inching higher and export running strong - which will run in the sellers’ favor.
“A supply-driven market is emerging which will be in full swing by September,” the second seller into Alabama said.
Fastmarkets’ price assessment for steel scrap shredder feed, fob Ohio Valley was unchanged week on week at $82.23 per gross ton.
Fastmarkets’ price assessment for steel scrap shredder feed, fob Midwest decreased to $88.07 per gross ton on Monday, down from $90.01 per ton the week before.