Ferrous scrap mart seen sluggish into the holidays

According to an executive in the North American export trade, there haven’t been sales at these levels from North American exporters, who are not enjoying the currency bonus. But, if they want to sell, he said, they will have to knuckle under to European price levels with an allowance for the difference in freight. We’ll see if they do.  

So what’s happening on this side of the pond? November price tags were largely sideways, with a few districts managing a $10-per-gross-ton drop after a few days of haggling. December is shaping up as a “soft sideways,” though some are calling it down.

SMU sought the opinion of a raw materials purchasing manager at a steel mill in the Great Lakes region. He commented that “inventory levels are not abundant in scrapyards or mills at this point.” 

In December, mills are carrying low inventory to improve cash flow going to the end of the year, he continued. He expects to see a soft sideways move for December. 

“I feel dealers will hold their tons if they hear/feel downward pressure,” the purchasing manager added.

For January, he believes mills will be looking to buy more scrap to bolster inventories for the colder months, but doesn’t see big premiums for larger tonnages of prime scrap getting out of hand. 

Another scrap seller in the Southeast thought the December market would be down but only marginally, “probably $10/gt.”

When asked about the extended weakness some players are predicting for January, he disagreed.  Without putting a number on it, he thought prices should be stronger. 

Heading up to the Midwest, a manager of a large scrap concern in the region was less optimistic for both December and January.

He said, with deals on hot-rolled coil (HRC) continually settling in the $640s, he’s thinking there will be an 80% chance of things being down and 20% sideways. Demand for HRC just isn’t there. 

The Southeast manager continued that this fall in pricing would have happened sooner if it weren’t for the Covid-19 pandemic and the Russian/Ukrainian war.    

He went on to lament the situation we now are experiencing, saying over the last two to three years both industries were enjoying the best of times, with high prices and good demand. The economy was coming back nicely from the Covid closures. And, despite inflation, consumer spending held up. 

Then, things inexplicably started to unravel. Was it poor steel demand or increased supply?  It sure wasn’t like other downturns we’ve endured over the last few decades. At least we knew what caused those. Nobody has explained what caused this and how it’s going to improve.