April Scrap Negotiations

Midwest negotiations are not yet complete but, according to one SMU source, “The market is developing today and will likely be completed by tomorrow/early next week. Generally speaking, supply seems to be sufficient for April demand, but increasing share by the EAF flat rolled producers resulting from the BOF outages will likely add upward pressure to prime grades heading into May/June.”

One item of interest is the expectation that if the EAF mills do pick up a substantial share of the flat rolled market, this is likely to force prime grades of scrap higher and we could see the return of a more traditional spread between prime vs. shredded scrap.

One of our east coast sources penned us this summary of the market from their perspective as of this afternoon:

“The OH Valley seems to have stalled.  I think it also ultimately ends up about $20/GT for shred.  Prime and shred are pretty close.  There is one mill overpaying the market but generally DJJ locked up a bunch of tons last week and is sitting on the sidelines before they buy.

“The south looks to be up only about $10/GT.

“Export is firming – no doubt.  I don’t know where it gets to but prices are rising and demand may be improving.  

“As I have been saying for about six months, the US is tight scrap now.  Prices would not have fallen this winter but for the change in the export situation.  That situation is now changing again and tons that historically went overseas will begin to flow that way again.  The spring flows will improve but I don’t know how long the improvement will last.  I don’t think there is big downside here.  May could be a little lower but the bottom will not fall out.  There just isn’t enough scrap available.”

SMU will continue to watch the scrap markets as we expect most prices will settle on Friday or very early next week.