Scrap Prices North America

Ferrous Scrap Prices Up $20 in August

August 6, 2019

Steel Market Update sources report that ferrous scrap prices have turned around after repeated declines in the first half of the year and are settling up $20/GT for August, lending support to recent price increases on finished steel.

“Demand is about the same for August as it was in July, there is just a little less scrap in the market,” said CRU North America analyst Ryan McKinley. “Mills are not inclined to drop scrap prices again given that it could lead to a tighter market and would hurt their chances of securing higher finished steel prices.”

Most transactions in the Midwest and Ohio Valley closed at up $20/GT, confirmed a dealer in the Northeast. However, some consumers did reach out and buy remote scrap at up $25-30/GT to complete their programs. “The biggest factor in the price increase was a lack of supply in dealers’ yards. Domestic demand seems steady into September, but there are concerns beyond. International markets for ferrous are stable through August, but a growing bearish sentiment has most participants doubting current price levels will last,” he said.

Eastern and Southern markets remained the firmest, while the Midwest was the weakest, reported another scrap exec. “In fact, much of the Midwestern scrap flowed eastward to the Ohio mills and allowed them to generally increase prices only $20/GT after they had dropped prices $10/GT in July.”

Export pricing “is stable but a little tenuous,” he said. “With the weak overseas markets and now the weaker RMB, it’s hard to see Turkish export markets for finished steel rising. Their metal spread is under $170, so they need to try to push scrap prices lower by $5-10. But with the stronger U.S. domestic market and low dock inventories, that’s going to be a challenge. So, we wait and see. A stable export market over the next few weeks, even if it drops a few dollars, should give way to a relatively stable U.S. domestic market into September.”

“Demand for scrap is improving, but the obsolescent flows into dealers’ yards has waned with the numerous price drops this year. The flow of industrial scrap won’t return to normal until September,” commented another source.

Looking ahead, the market sentiment is mildly bullish, he said. Much depends on the export markets, which have been lackluster at best. “Turkey has taken a break for now. If they come back to a rising U.S. market for a significant buy, then September looks to be up $20-40/GT. Conversely, if they don’t, scrap will be sideways to up $10/GT. The situation will be clearer in the coming weeks. Right now, Turkish prices are stuck at $294/MT for HMS and $5 more for shredded.”

The pig iron market is showing firmness, he added, with buys at $365/MT CFR ex N. Brazil and as high as $368 ex Ukraine. “The next sales should crack the $370 threshold. At these prices, the spread for pig iron to busheling is approximately $100/MT on a delivered basis.”

One SMU source puts August ferrous scrap prices at the following: Shred, $285-300; HMS, $250-260; P/S, $275-280; and Bush, $310-315 per ton. Another puts Midwest and Eastern shred at $275-285 per ton, with Southern markets about $5-10 stronger and busheling at a $20-25 premium to shred.