Scrap Prices Up $30 in Most Markets

Shredded Scrap (shred) was reported at $388 per gross ton ($385-$391 range). SMU October number for the region was $355 per gross ton.  The new number is +$33 per gross ton.

#1 Busheling Scrap (bush) rose to $425 per gross ton ($420-$430 range). Our average for the region at the beginning of October was $403 per ton. The new number is +$22 per gross ton.

Midwest mills are reported to have robust buying programs for the month of November while supply continues to be tight.

One of our eastern scrap sources provided SMU with the following analysis on how they were viewing the market both now and out over December and potentially beyond:

“November prices generally bended up $25-$30/GT higher than October.  The further west you go the stronger the market (the absence of Evraz Claymont impacted eastern demand).  And the price increases were pretty much uniform across the grades from my perspective.  Export buying prices at the docks have moved up about $25/GT as well.

“Overall, November mill demand for scrap was not particularly great.  The price increase in my opinion was more supply driven.  And even after we raised our buying prices this week flows remained very lackluster.  Scrap inventories in dealers’ yards are not deep.  We are in November and already are scrounging for scrap.  I am pretty sure that not all mills have bought as much as they needed for November, but the real question is whether scrap dealers will be able to buy all the scrap to timely fill their orders.  

So what does this say about pricing over the next several months?  Even absent growing demand for scrap I can’t see prices dropping or even staying sideways until spring.  If demand improves, look out.  We could see scrap prices rise dramatically.  At some point higher prices will bring out more material and we will have a market that is in better equilibrium.  But from my vantage point we are not near that place today.”  

Other SMU sources believe December prices will remain the same as the new November levels as most mills are making their volume buys.  There is a busheling surplus in the Ohio Valley and December is a short melt month with a number of mills taking down equipment for maintenance.  

There does seem to be a consensus of opinion that December prices will not move lower from today’s levels.