Prime Scrap Prices Fall as Much as $150/Ton in July, Bottom Near?

• Busheling at $480-530 per ton, averaging $505 per ton, down $130 from June.
• Shredded at $430-450 per ton, averaging $440 per ton, down $25 from June.
• Heavy melt (HMS) at $340-380 per ton, averaging $360 per ton, down $35 from June.

“The degree to which prime grades traded lower in July was very surprising, but the mills were successful in pushing the prices as low as they did because a lot of those grades are traded on monthly contracts with fixed margins,” said one Northeast scrap executive. “With some summer manufacturing shutdowns, you may see prime grade supply tighten a bit from here leading to continued volatile price moves. Frankly, I think mills were probably surprised by how easily dealers accepted their down $150 proposition. It’s a dramatic move that could produce a bounce from where it ended up in July in coming months. I think that the large month-over-month moves are finished for now and that we will trade in smaller bands over the next few months.”

Another source commented, “Flows seem to be down a bit, which may help stop the bleeding. There is speculation that we could be near a floor, although others expect August to be down again.”

Recent Turkish HMS and shredded scrap offers jumped as much as $80 per ton according to multiple sources. “Export pricing spent most of June in a perpetual downward spiral, plunging more than $100 from the beginning of the month until it bottomed around the last week of June. Since then, it has risen like a phoenix from the ashes,” said one exec. He explained, “There was a pick up in Turkish demand in late June (in response to their rebar demand), and all of a sudden cargos were hard for Turkish mills to find. I am not terribly confident that this renewed demand is very deep, so I am not sure how much higher export pricing will go from here.”

Another source commented, “The feeling is the USA market has bottomed… especially since export prices to Turkey have increased so much in the last several weeks. US mills cannot drop HMS and shredded [prices] much more without coastal supplies heading overseas.”

PSA: You can chart out scrap prices as far back as 2007 using SMU’s interactive pricing tool.

By Brett Linton, Brett@SteelMarketUpdate.com