Final Thoughts

With the various flat rolled indexes reporting hot rolled pricing approaching $680 per ton in the mill spot market we are quite close to the $685 announced by Nucor on April 4th and matched by a number of the domestic steel mills. The question now is will the mills attempt to move prices up to the $700 number announced by AK Steel or, are they sensitive to domestic capacity coming back online as US Steel Gary Works gets closer to running full out and Great Lakes projected to have their steelmaking operations back up in early to mid-May? The other issue the mills have to consider when determining flat rolled spot pricing is the spread between domestic and foreign steel not wanting to increase the spread thus inviting more foreign steel to the U.S. and Canadian markets.

Later this week the steel mills and their scrap suppliers will begin negotiations for May scrap pricing. Early indications are for ferrous scrap pricing to move sideways to down $10 per ton. Midwest dealers are reporting better flows of obsolete scrap into the yards as the weather improves. Dealers in the south and east are reporting flows to be about the same as they have been, even though historically April is a month were upticks are the norm. The electric arc furnace sheet mills (mini mills) are essentially running to capacity due to the production issues at US Steel and other integrated steel producers. This has raised demand for scrap. At the same time the mills having issues getting iron ore have plenty of scrap built up and on the ground. According to Mike Marley of Metal Prices, the Turkish mills did not buy a pound of scrap from the U.S. last week and it is believed the U.S. exporters won’t drop the numbers low enough to entice them to buy here versus Europe. Without a strong export market pressure is put on east coast, mid-Atlantic and Ohio valley pricing. Another one of our scrap sources advised that flows are good, the rail car shortage appears to be easing and prices should continue to move lower both in May and June.