As recently as late last week, scrap market sources throughout the US largely believed that November scrap prices would hold “mostly level.” However, all sources polled said they believed that if the United Auto Workers Union (UAW) strike, which had essentially halted auto production at Ford, General Motors, and Stellantis, came to an end, their prediction would shift from sideways to up.
For example, for the past several weeks, flat rolled sources have reported a widespread believe that sheet mills would roll out a series of price increase “the very second the UAW strike came to an end,” and many believed that mills would attempt to take HRC prices up, from an average $37.50 cwt. ($826/mt or $750/nt), as of late last week, to $50 cwt. ($1,102/mt or $1,000/nt), “in short order.”
And while many scrap sources polled earlier this week mostly echoed their belief that November prices would “probably” hold sideways (with some saying they felt that prime grade scrap, which has been impacted by the weeks-long UAW strike, had the potential to firm by $20-$30/gt due to lessened availability, and others adding that they felt that that lessened availlibity of other grades, (due to lessened scrap inflows) could help bolster HMS and shredded scrap price), today, the general sense of the market has changed for the better.
Late last night, the UAW announced it had reached a tentative agreement with Ford. If that agreement, which includes a 25% pay raise for union members working at Ford plants (among other concessions by the automaker), is ratified by UAW members, this would end the strike at Ford’s plants.
Perhaps not surprisingly, US Steel followed that announcement with a price increase letter. According to correspondence sent out to customers, the mill is eyeing new, minimum HRC base price of $45 cwt. ($992/mt or $900/nt), FOB mill. This is the second $5.00 cwt. ($110/mt or $100/nt) announced by the mill in the past seven days.
(Although other flats mills have yet to announce, it’s believed those announcements are pending.)
“I think primes lead the way up $30/gt with secondary grades a strong sideways. Flat rolled order books look very strong and I think November demand will robust,” a source said. “If primes [increase by $30/gt], I think secondary grades could trade up $10/gt, but I don’t see room to match what primes could do.”
Others agree that both the UAW and US Steel announcements have changed the trajectory of November scrap prices.
“Away we go,” a second source added, while a final source noted that he sees a very solid market for November. Yesterday, prior to the both announcements, that source said he believed that lessened scrap inflow volumes in the Midwest, coupled with the fast-approaching winter, had the potential to help push both shredded scrap and HMS prices up by $20/gt in November.
Today, he believes that shredded scrap now has the potential to firm by $40/gt before the end of the year.
Additional information is expected to emerge by the middle of next week.