Lower Global Scrap Prices Seen Pressuring US Tags

He sees export demand remaining in a downtrend for at least the first half of May and probably longer.

“But the elephant in the room is Chinese supply and production, which needs to decrease substantially in response to continued weakening demand there and in the rest of Asia,” the source said. 

He believes we could see US shredded lower by $30-50 per gross ton in May, and prime grades down as much as that as well. 

“Cut grades remain headed in divergent directions with plate and structural in tighter supply vs. heavy melt,” he added.

Another market source is seeing not only limited demand domestically but also a dramatic drop-off in demand in Turkey and Asia.

He said it could give US mills the opportunity to take prices down $50-100 per gross ton.

“I may be wrong, but there’s a long way to fall,” the second source commented, adding that he expects prices to settle sometime later this week.

For prime scrap this month, respondents to SMU’s market survey last week were also bearish. Only 10% of respondents thought prime scrap prices would rise this month, 50% saw prices sideways, and 40% saw prices declining.

Last month marked the first fall in scrap prices since December.

SMU’s scrap pricing for April stood at:  

• Busheling at $520-550 per gross ton, averaging $535, down $15 from the previous month.

• Shredded at $470-500 per gross ton, averaging $485, off $25 from the previous month.

• HMS at $370-400 per gross ton, averaging $385, falling $30 from the previous month.

By Ethan Bernard, ethan@steelmarketupdate.com