Scrap Prices North America

Steel Prices Likely to Get Support from Higher Scrap in August

July 9, 2019

Ferrous scrap prices are widely expected to move up in August anywhere from $10 to $30 per ton, lending support to higher finished steel prices.

“Most of the trade on both sides of the aisle are expecting the August market to strengthen, though there is debate on how much,” said one Steel Market Update source. “The prevailing view is $15-20/GT across the board. Most of the mill outages are over and the recent increases for HRC have increased demand to where business is looking better.”

“There is clearly more strength in the domestic market,” agreed a dealer in the Northeast. “Demand should be better and yard inflows are tapering. Export pricing has stayed steady for the most part. I look for prices to rise $10-$20 depending on where they traded in July.”

CRU North America Analyst Ryan McKinley also expects scrap to rise by about $20 per ton for most grades in most regions. “We have seen an uptick in finished steel prices,” he said, “and scrap flows have started to dry up.” Demand seems to be back on an upward trajectory with AISI finished steel production data showing capacity utilization rates still over 80 percent. “In short, supply and demand seem relatively balanced heading into August, but steel mills need scrap prices to increase to help support price increases of their own and to make sure scrap pipelines remain open.”

Another dealer on the East Coast places the market’s expectations for August a bit higher at $20-30/GT. “Many mills in the Ohio Valley came up short for their July buys and other mills that previously announced no buy came into the market late with little success buying scrap,” he said. “Inbound flows to the scrap yards are off as suppliers lower on the food chain are holding back tons in anticipation of higher prices.”

Export demand also should contribute to higher domestic scrap prices in August. U.S. exporters anticipate more buying by Turkey at delivered prices over $300 per metric ton, “and it could go much higher,” said one source.

Pig iron prices have also increased, dragged upward by limited supply of lower phos material, high iron ore costs and optimism in the scrap markets. Current offers by producers are at $365/MT CFR and could go higher, said the executive. “There is no question that certain EAF mills cannot live without pig iron despite the price and availability of low residual scrap. HBI and DRI are limited imports on a merchant basis. Most is produced by mill-owned assets. With iron ore prices this high, the price of these two items is no bargain on a spot basis, assuming one can find it.”