High Scrap Prices Expected to Ease in May

A second scrap dealer agreed that prices would drop in May in part on weakness abroad. Turkish scrap export prices are down $90 per ton compared to early April, and Asian export markets have been inactive, he said. “We have all heard about the problems in China. So, all this is weighing heavily on our domestic market.”

As for the domestic market, he added, “The US scrap industry is just too efficient, especially when prices rise to recent levels.”

Recall that from February to March, scrap prices saw the largest monthly increase in our history, with shredded scrap trading in March at around $600/GT and prime scrap at $700/GT – up by $125-175 over February. In April prime scrap rose another $75 per ton, while obsoletes were flat to down. Prior to the Ukraine-Russia war, prices had declined in January and February.

A third scrap executive agreed, mostly. “With the recently falling export market, the season of the trade, and the mills’ purported adjustments for lack of available pig iron, the sense is that the market will move lower. The question is by how much.”

But he also stressed that the pictured varied significantly by region. “The mills will have us believe that the scrap flows and offers are overwhelmingly strong and scrap is abundant. That may be true in some areas, but it does not comport with what we are seeing in our yards, where inflows have been underwhelming.”

Obsolete grades, such as shred, are more elastic to price, which means more flows into yards when prices are high. That is not as much the case for prime scrap, which correlates more with manufacturing processes such as automotive stamping.

You can chart out scrap prices as far back as January 2007 with SMU’s interactive pricing tool.

By Brett Linton, Brett@SteelMarketUpdate.com