November ferrous scrap market slows with export pullback

I spoke with a scrap executive in the Great Lakes area who is calling the market sideways. He believes mills are flooding the market with hot-rolled coil (HRC) and driving prices down into the $600s per short ton. So, there won’t be much of a recovery there. He went on to mention scrap flows being stable and declining export prices just add to a growing feeling of pessimism. Scrap demand is simply lacking.

I also contacted a purchasing manager in the Midwest who thought scrap demand is “stable, but not strong.”

In his view, November will be supply driven. The Chicago and Detroit markets, which stayed even in October, may experience a modest increase of $10-20 per gross ton (gt), if mills from other districts reach into these districts for tons, mostly likely industrial tons.

Looking to the South, I spoke with a large regional scrap processor about his view on the market. He is of the opinion the move in November will be sideways as well. His reasoning includes lower export prices, static steel prices, and deficient scrap demand. Although obsolescent scrap flows are off throughout the South, it should be enough to hold prices where they are. He also said he does not think the election will have any short-term effect on the scrap or steel markets.

It is not uncommon for the November scrap market to trade sideways. It does not mean December and January will follow suit, as some are now saying due to the weakness of HRC prices. Dealers do not want to sell large amounts of scrap in December and US mills typically do not want to buy much scrap in December. This usually sets a firm December market followed by an uptick in January. We’ll have to see if this will occur this year.