Scrap Prices North America

Ferrous Scrap Expected to Settle Up $20 for March

February 26, 2019

Ferrous scrap prices are expected to settle around $20/GT higher for March following weakness in January and February, report Steel Market Update sources.

“The March domestic market seems to have $20/GT baked into it,” commented one dealer in the Northeast. “Poor inflows due to bad weather and seasonality, along with a stronger export market, are pushing prices higher to meet continued solid demand from U.S. mills.”

CRU North America Steel Analyst Ryan McKinley sees no downward pressure on scrap prices. “I think they will end at least $10 per ton higher in March than in February, and probably more like $20 or $30 higher for both prime and obsolete grades,” he said.

Export prices have receded a bit, but enough cargoes have been booked to keep material from flowing from the East Coast inland. “Even with the most recent deals, export prices are up $25+ from those at the end of January,” he said.

Harsh winter weather conditions have hampered scrap flows into both dealers’ yards and into the mills. “While the former means that mills will have to pay up to generate more scrap flows, the latter means that dealers will still likely owe material come March. By some estimates, flows into dealer yards are off by around 30 percent and up to five production/shipping days were lost in some regions,” McKinley noted.

Currently, most dealers are struggling to finish February orders and a large percentage of them will not be completed by month end due to lack of material, reported another SMU source in the East. “Most shredders have already raised scale prices by $20/GT and still the inbound flows are anemic,” he said. “Weather has been a big factor, but most savvy scrap suppliers are waiting for the March price increases, shipping as little as possible until that time.”

Demand is strong from the domestic mills, which will not have the benefit of cheap imported scrap or scrap offered from U.S. exporters. In fact, U.S. exporters will be competing for domestic scrap to cover March and April sales into Turkey at price levels up $50/GT from January lows. “So, with little or no alternatives, mills will have to pay higher numbers to jumpstart better scrap flows,” he said.

“The U.S. market is stronger based upon export and bad weather. However, increase expectations have been tempered by the export market drifting down about $10/MT over the last week. The market will be up, but not $30; probably $20/GT across the board,” estimated another scrap executive.

Commenting on the pig iron market, the Vale dam disaster is having a bullish effect on all grades, he said, since the main input cost is iron ore. It has affected Brazil more than the CIS and Russia. “Steelmaking BPI has jumped $10-15/MT to $360-ish CFR NOLA. The next round of buys, depending upon how fast they happen, should be up from here until the imbalance is corrected.”