US scrap markets for June are now discussed sideways to $20-$40/nt ($22-$44/mt) less on the heels of continued flagging domestic finished steel demand, and amid growing expectations for mill cancellations on existing May scrap orders over the next several days, market insiders told SteelOrbis this week.
This week’s even lower scrap call for the June buy cycle continues a consistently lower trend that saw June scrap discussed sideways to $10-$20/nt ($11-$22/mt) lower compared with May scrap settles last week, and an even earlier weekly June buy cycle market call pegging June prices sideways to May near the beginning of the month.
“We’re hearing reports that Cleveland-Cliffs sent announcements to their suppliers that they’re not accepting any more shipments of (May) scrap, so they’re basically cutting people off,” said one Midwest scrap market insider. “Normally, when this happens (producing mills) are thinking of taking the price of scrap down.” The market insider added that few scrap dealers are making much money now with prices down and new shipments to mills all but non-existent. “Imagine owning a shredder and the mills aren’t buying,” he said. “So as a result, there isn’t a lot of scrap available at the moment. That’s the only thing that’s keeping some of the scrap pricing somewhat stable.”
Another scrap insider saw much of the same thing, adding, “Scrap flows are pretty thin coming into the yards, so the situation doesn’t appear to be very good. Yards and shredders are reducing their (sales) prices to maintain positive cash flows.”
At last report, Midwest busheling scrap, which is largely tied to price movement in the flat-rolled market, is quoted at $395-$400/nt ($435-$441/mt), down from previous assessments at $415/nt ($457/mt). Other Midwest grades were basically reported flat to this past week, with P&S discussed at $380-$385/nt ($419-$424/mt), shredded at $390-$395/nt ($430-$435/mt) while HMS I/II was reported at around $340/nt ($375/mt).
In the hot-rolled market, the price that Nucor charges its customers at all of its producing mills, its so-called Consumer Spot Price (CSP), increased for a second straight week by $10/nt ($11.02/mt) to $780/nt ($860/mt). Market insiders quoted HRC to SteelOrbis this week at $755-$765/nt ($832-$843/mt), versus previous assessments at ($760-$780/nt or $838-$890/mt). The move by Nucor is seen by many market insiders as a continuing attempt by the steel producer to keep a floor beneath falling spot market steel prices, which have continued to languish in the US in the face of scant May demand and plentiful inventories.
Another Midwest scrap dealer expects mills to “take full advantage of the situation,” based on continuing low demand, and expected them to take scrap pricing sharply lower. “I think $40/nt ($44/mt) lower is the number for June,” he said. “It’s free for all out there right now. We’re seeing really thin order books and inventories are really high at certain mills.”
In the US East Coast scrap market, more discussions of mill cancellations and lower export values dominated conversations, with one East Coast market insider predicting a $20/nt ($22/mt) decline across the board for June East Coast scrap pricing versus May. “My prediction is that I see HMS #1 coming in at $285-$290/nt ($314-$320/mt), P&S around $300/nt ($331/mt), busheling at about $380/nt-ish ($419/mt), and shredded around $330-$340/nt ($364-$375/mt). He continued, “These numbers are around $20/nt ($44/mt) less than May. I’m saying down $20/nt ($22/mt) to be safe. That’s where this market looks to be wanting to settle.”
The East Coast contact expected additional mill cancellations to be announced on Thursday, May 30th, for May orders not yet shipped. “Right now, we’re forecasting a decline of $20/nt ($22/mt) across the board for June, with P&S maybe even lower because we’re seeing a lot of demo work going on. On the export side, pricing is down right now about $5/nt ($5.51/mt) across the board, but we expect a bigger decrease to be coming next week.”