Scrap Prices North America

Scrap Prices Take Another Dip Lower but Dealers Think This is the Bottom...

November 5, 2015

Our scrap sources reported ferrous scrap prices as having the most strength in the east where export pricing has bounced off the bottom and momentum has apparently turned in that region. One of the east coast dealers told us that scrap flows are “atrocious” and if it wasn’t for the “terrible demand situation the market would be higher.” We were told a number of dealers in the east are sitting on scrap feeling that at worst December numbers will be the same as November.

Exporters are anticipating prices to Turkey will rise from here. Exporter buying prices have increased by $20 to $30 per ton as selling prices are “well off the bottom by a good twenty dollars.” We were told to “Watch the currency valuations for further insight” regarding export price strength. If the dollar weakens U.S. exporters will become more competitive with European scrap into Turkey.

In the east we were told plate & structural, heavy melt and shredded scrap pricing all moved sideways.

One of the national scrap companies told SMU in a note, “Generally speaking, the markets have traded out for November at levels slightly higher than earlier anticipated. A couple of key buyers stepped into the market last Friday, essentially setting a tone of down $10-15/gross ton across most obsolete grades. Prompt industrial grades were down from $15-20/gt on primes and $30+/gt on turnings and borings. The later more likely the result of excess supply against narrow demand.”

We were told that US Steel made no buys in the Midwest and SDI bought only from OmniSource.

Dealers are waiting with hopes that the inventory situation will correct itself bringing buyers back to the domestic mills. Operating rates seem to be key if the dealers are to get prices up from here. One national scrap company source told us, “The market was surprisingly quick to settle given early rhetoric of “imploding demand” on behalf of mills and dealer “panic” for cash flow. The market is likely range bound through year end with potential limited improvements in Q1 if mill operating rates, particularly EAF-based production, show any recovery.”

We were told there is not much of a market at this moment for heavy melt scrap. However, one of our sources pegged HMS at $145-$155 per gross ton.

Shredded scrap is reported to be trading in the $170-$180 per gross ton range.

#1 Busheling in the $175-$185 level.

As of late today (Thursday) there were still areas where scrap prices had yet to settle. We will have more on the subject in Sunday evening’s issue of Steel Market Update.