Scrap Insight: All Eyes on UAW as 'Unsettled' Oct. Trade Approaches

So, for the coming month, will the mill buyers attempt to take down the obsolete grades they were unable to last month?  If so, will the trade support this move, especially when the export markets for these grades have held rock-solid in Turkey? Can they take busheling down further without creating dealer resistance? After all, flows have been waning lately, and the winter months are on the horizon.

A scrap executive in the Chicago area believes #1 grades, like busheling and #1 bundles, will remain weak in October. Shredded and HMS are not as weak. But he sees all grades falling by $10-20 per gross ton.

It seems the events concerning the strike will be the main determinant. Do the mills need prime scrap, like #1 busheling and #1 bundles? I spoke to a retired GM executive about the state of the strike. He said the parts distribution centers were not active, but the parts manufacturing centers were working. This could mean a certain amount of scrap would be generated. Likewise, steel would be needed for these centers. The question is: How much?

On Friday, Sept. 29, it was announced the UAW expanded its strike to more assembly plants at Ford and GM. It’s unclear as to how this will affect production at the stamping plants in Chicago and the Detroit area.

It is noted various flat-rolled mills have scheduled outages in Q4, and they’ll need less prime scrap than they normally would. Apprehension about continued shipments to automakers is also weighing on buying decisions. But the scrap community has faced obstacles like this before. Once the outages are behind us and the strike is settled, the scrap buyers will come back into the market all at once. If this happens, say in November, the price of all grades of ferrous scrap will severely escalate. What the mills save by dropping prices now may not outweigh the increases they could face in December and January. We’ll see what happens shortly.