US scrap markets for June are now discussed sideways to down $20/gt ($20/mt) on the US East Coast and $20-$40/gt ($20-$41/mt) lower than May settled prices in the US Midwest, as scrap dealers and mill buyers continues to negotiate their June positions, market insiders told SteelOrbis.
The June buy cycle is expected to conclude with June settled prices next week.
Reports of sharply lower June scrap prices are the result of continued low US demand for US finished steel products, insiders say, resulting in limited new buying activity on the part of steel mills and increased indications that some mills might be using the lull in new finished steel requirements to conduct plant maintenance, further limiting the need for new scrap.
“There’s not much happening in the Midwest right now,” said one SteelOrbis contact about mill buying activity for the new month. “We’re seeing some pretty good resistance on the part of the scrap dealers to these low prices, and Nucor still hasn’t been heard from yet, so they may not really need that much scrap.”
As of report writing on June 7, US domestic prime busheling scrap is discussed at $30-$40/gt ($30-$41/mt) discounts to May settled prices or $375-$385/gt ($381-$391/mt), while other grades such as shredded, P&S and HMS#1 are talked at $20-$30/gt ($20-$30/mt) discounts to May settles. That would put shredded at $370-$380/gt ($376-$386/mt), P&S at $345-$355/gt ($351-$361/mt), and HMS#1 at $310-$320/gt ($315-$325/mt).
Market insiders continue to tell SteelOrbis that continued lower demand doesn’t bode well for scrap and finished steel prices, though there could be light at the end of the tunnel.
“I think we have reached the bottom, and will spend the summer (at these price levels),” said one Midwest scrap insider. “I would expect demand to improve by the fall.”
On the finished steel side, this week, HRC pricing declined again to $37-$37.50/cwt. ($815-$827/mt or $740-$750/nt). Market insiders hinted that HRC pricing could decline to $35-$36/cwt. ($772-$794/mt or $700-$720/nt) in the short term if demand doesn’t improve.
On the mill side, Nucor left its weekly Consumer Spot Price (CSP) unchanged for the week following two previous weekly price increases at $780/nt ($860/mt). The Nucor move to leave its CSP stable this week is seen by some market insiders as a way for the mill to limit further finished steel price declines and that a price floor may have been reached.
US East Coast, prime busheling scrap and P&S scrap is last discussed at $20/gt ($20/mt) discounts to May or $350/gt and $320/gt ($356/mt and $325/mt), respectively, while HMS#1 is talked flat compared to May at $310/gt ($315/mt).
“I think the push for minus $40/gt ($41/mt) for June scrap in the Midwest is just too much,” said a final SteelOrbis market insider. “We’re seeing some pretty good resistance from dealers to these kind of price levels.”