December scrap settle seen down $10-20/gt

Dealer resistance did not factor in due to the decreased volumes needed. But with the remaining demand from these mills, which had not purchased until yesterday, their attempts to drop $20/gt were resisted by the larger suppliers. This has set the tone for an upwardly trending market in January.

In Chicago and other Midwest locations, prices only dropped by $10/gt, according to scrap sources.

One scrap manager in the Southeast said they commonly ship continuously to mills during the first part of each month on a “price-to-be-determined” basis. So as much as 40% of their normal order size had been completed, he continued. When they were informed the December price would be down $20/gt, they ceased shipments and will not sell again until January.

“I don’t know of anyone who continued to sell at down $20 around here,” he added.

It may be too early to see how scrap flows are reacting to the recent price declines. The general thought is they will be much slower. This would usually set up a large increase in January price levels.

But given the lack of demand for steel, any increase in prices for January shipment should be manageable. Another bearish factor is the weakness in the export markets on both coasts.