As of mid-to-late last week, scrap market sources throughout the US believed that March prices would likely trend at down $30-$40/gt for cuts and shred, and down by as much as $40-$50/gt on primes.
This week, however, after news that scrap prices into Turkey had endured several downward revisions, sentiment has taken a turn for the worse.
For example, on Friday of last week SteelOrbis learned that a booking done by an Izmir-based producer on February 28 was closed at $393.5/mt CFR for HMS I/II 85:15 scrap and at $410.5/mt CFR for shredded scrap. The information indicated that benchmark HMS I/II 80:20 scrap prices from the US had declined another $5/mt for Turkey as compared to the previous ex-US transaction done just one day before.
Yesterday, SteelOrbis also reported that an ex-US scrap deal to Turkey heard over the weekend was transacted at $385/mt CFR (which has since prompted a $15-$20/gt dip in HMS I/II 80:20 dock-delivered prices for parts of the East coast.)
Suffice to say, chatter that March settled scrap prices are likely to soften beyond initial expectations has begun to run rampant.
And while US domestic mills have not yet come out with March pricing (it’s widely held that mills will announce on late-Wednesday or early-Thursday), it’s now suspected that cuts and shred could settle at down $40/gt, with the possibility that busheling scrap (in some regions) may fall by $60/gt.
Also of note, is that in addition to softer export prices, which have done their part to dampen sentiment, domestic HRC prices are still trending soft.
Late last week, SteelOrbis reported that US HRC spot market prices were down by another $2.00 cwt. ($44/mt or $40/nt) and were being heard at roughly $41-$43cwt. ($903-$948/mt or $820-$860/mt) FOB mill, which reflects an approximate $14 cwt. ($309/mt or $280/nt) drop from their high point in January.
“Imported hot rolled offers [are coming in at slightly higher than $35 cwt. ($838/mt or $700/nt)], so having domestic settle in the [$37.50-40.00 cwt. ($826-$827/mt or $750-$800/nt) FOB mill] range is not out of the question,” one source commented, adding that he believes that HRC prices may ultimately bottom before the end of the month.
As such, scrap market players are keeping close tabs on pre-scrap trade chatter, to gauge whether any additional downside factors will influence March settled prices.
March settled prices are not expected to emerge until the end of this week, at the earliest.