Scrap Prices North America

Ferrous Scrap Prices Move "Mostly Sideways" in June

June 4, 2020

Ferrous scrap prices, which were widely expected to move higher again in June, traded “mostly sideways” as supplies increased while demand continued to lag, report Steel Market Update sources. In May, ferrous scrap prices settled up $30 per ton for shredded and up $40-50 per ton for busheling as coronavirus shutdowns disrupted scrap generation and collection. Early forecasts called for more of the same for June, but that is not the way it played out.

“The June market in the Ohio Valley is unlike any I have seen in my career,” said one dealer in the Northeast. “The amount of purchased scrap in this region is virtually zero as mills are either shut down or taking every conceivable step to conserve cash—from melting existing scrap inventories down to zero to shipping home scrap from sister plants to avoid paying for scrap on the outside.”

SMU sources report that the price for prime scrap in June rose by $10 per ton, while shredded scrap declined by $10 and cut grades moved sideways. That puts busheling at approximately $320-330, shredded at $255-260 and HMS around $230 per ton.

Shred prices in some areas began down $10 and dropped to down $20-25 with the relatively few mills buying being offered far more shred than they can consume, said one dealer. “For this commodity, the overhang will extend into July. At this point in time, the scrap collection rate for shred is exceeding scrap demand from the mills.”

Scrap demand in the South and Midwest was considerably better than demand in the Ohio Valley and the Northeast, said sources. While demand overall is slightly better as the market enters June, scrap supplies are materially higher than in May, especially for shred. “Many more yards, which were closed in April and early-May, have been open for several weeks now, providing more flow to scrap dealers. And many dealers mistakenly raised shredder feed prices, some to compete with exporters and some based on the expectation that the shred market would rise in June,” said another scrap executive.

Export demand continued to be firm with low inventories at the export docks. If that continues, that force will keep the traditional export-destined tons out of the domestic market. “Exporters are paying big money to procure scrap to load ships, which is pressuring dealers in the domestic market, but we expect dealers here to begin to lower prices for shredder feedstock the further west one travels,” said one dealer.

Looking forward to July, much depends on how much prime industrial scrap is produced. Mill demand will definitely have to pick up for prices to improve, said scrap execs.

“Export prices will play their part, as Turkey has been buying heavily from both Europe and North America throughout May and into June. It’s hard to believe they will continue at this pace. If they drop out of the market, U.S. domestic prices for July will be sideways to down $10-20 per ton on obsolete grades,” predicted one dealer. Others predict the ferrous scrap market will be relatively balanced for the next 30-45 days as both supply and demand improve.

In the pig iron market, one U.S. mill reportedly has concluded a 55,000 MT Russian cargo at $312/MT CFR Nola/USEC. There were reports of additional Chinese purchases from South Brazil and Russia at prices in the $330’s delivered.