December scrap prices may have only settled a week ago, but scrap market sources throughout the US say they’re already starting to hear chatter about upward pricing during next month’s buy cycle. The big question at this point is whether the market will be up by $10-$20/gt, or whether it will settle at up $20-$30/gt once the dust settles.
“I still think the market will go up another $10-$20/gt in January and then I expect it to be flat for the rest of the 1st quarter,” a Chicago-based source said. “I’m hearing demand will be good next month, but I’m also hearing there is plenty of supply.”
Sources in the Midwest largely agree.
A second source said he also thinks the market will see some minor upward movement next month, while a third said that if the weather stays mild, he expects that prices will settle sideways to up $10/gt across the board.
“The big jump in December won’t do much for inventories but I just don’t see what’s driving this up much further,” he said. “I hope [the market proves] me wrong.
Scrap market contacts in other parts of the US, however, are a bit more optimistic when it comes to pricing. Some have said that scrap inflows and inventories in their regions are not as healthy as they are in others.
“[I think] primes [will be] up $20-$30/gt and other grades up $10/gt,” he wrote, adding that if export doesn’t take off any further than it already has, he believes January’s price gains will be kept in check and that everyone will get the scrap that they need. “I think we all admit that this market continues to have strength, but I think flows on secondary grades will actually be better than expected, particularly with the run up in pricing.”
Looking to the Ohio Valley, a source in that region said that while he believes that prices are going to rise again in the upcoming buy cycle, he does not see a “runaway market” based on the strong price increase seen during December. On the other hand, he also thinks that up $20-$30/gt is more likely than up $10-$20/gt.
“I believe the pressure will continue on primes due to continued demand at the [electric arc furnaces],” he said. “Shred and cuts will remain tight especially in the North and Northeast where the winter is setting in and scrap flows are negatively affected. Anticipating we will see a $20-$30/gt increase across the board. We’ll see.”
The January buy cycle is not expected to start for at least 2 more weeks.