Scrap market sources throughout the US say they’re waiting in anticipation for mills to come out with scrap pricing, especially in that sentiment appears to have waned “quite a bit” since the middle part of last month.
Prior to the year-end holidays, some sources believed that January prices would firm by $20-$30/gt from December settled levels, whereas others felt that up $10-$20/gt was more likely. This was largely due to the fact that sources had indicated that scrap inflows and inventories were not as healthy in some regions as they were in others.
A very small minority of those polled at the time said they thought that sideways to up $10/gt was the most likely scenario, due to large jumps in scrap pricing seen in December. For example, in the Ohio Valley, scrap prices settled up between $30-$70/gt, depending on the grade. Prime grade scrap prices in Detroit and Chicago also jumped significantly and settled up by $90/gt and $80/gt, respectively.
Sources believed that last month’s jumps were linked to still-rising HRC prices and widespread speculation that mills may have taken their inventories “a bit too low.”
This week, however, sentiment has shifted from optimistic to tepid, as multiple mills throughout the US have canceled bookings that have not yet arrived.
“Mill orders came across as canceled today,” a Chicago-area source said. “I still think demand is good, but there seems to be plenty of supply.”
Sources in other regions largely agree.
“It seems that the December increase has impacted January. Several factors are in play,” added a source in the Ohio Valley. “Mild weather in the Midwest and Northeast has allowed scrap to flow fairly well from November into early January. The risk is generally off for any long weather interruptions. Mills bought heavy and paid up and dealers have largely delivered and if they didn’t some mills are canceling. [Mills’] inventories are reportedly good.”
Others have noted that there’s been widespread chatter that at least one mill bought a couple vessels of busheling scrap from offshore sources, which is also likely to influence US prime grade scrap prices during this month’s buy cycle.
“This market is losing steam by the day it feels,” said a source in the Southeast. “I think scrap in the North is sideways with primes potentially down.”
A final source said they believe that the price trend for January is most likely to trend at sideways, although some grades in the Southeast may have the potential to firm slightly, as prices in that region “didn’t run away in December like they did in other parts of the country.”
“It’s by no means a sour market because it feels like mills may be trying to put some fear into sellers, but what I can tell you is that the optimism isn’t nearly as strong as it was 2 weeks ago,” that source wrote. “Primes could be up $10-$20/gt in some areas and sideways in others, and it largely appears that other grades may trend sideways as well. We also heard that [one of the big domestic mills] is importing a couple vessels of busheling [scrap], and I think this all plays into what’s going on this month.”
As of late-day Thursday, January 4, US mills have yet to announce January pricing. Some speculate that mills may not come out until the start of next week.