The downtrend in US scrap prices during this month’s buy cycle came as a stark surprise to most players in the market, as nearly no one had anticipated that primes would drop by as much as $60-$70/gt on primes, depending on the region.
Next month, however, roughly half of sources close to SteelOrbis say they believe that the market should be mostly steady.
“I think enough [finished] steel orders were placed over the last 2 weeks that will require many mills to buy more scrap in April than they did in March,” one source said. “I think the bottom [for scrap pricing] is near, or perhaps has already been found.”
A second source said he’s pegging April at sideways to soft sideways.
“Mill demand [and our inbound flows] seem to be in balance,” he added, noting he believes a lot of what happens in April will likely hinge on HRC sales and lead times.
For example, on Friday of last week, SteelOrbis reported that US HRC prices were trending at $36.50-$38.50 cwt. ($805-$850/mt or $730-$770/nt), FOB mill, against $40-$41 cwt. ($882-$904/mt or $800-$820/nt), FOB mill, one week prior. Another scrap market source said he believes that if HRC remains where it is, or even if it softens a bit more, that current scrap and HRC prices seem “equitable for everyone in the supply chain.”
Other market players, however, believe that mills may try to keep pushing scrap prices down.
“I think we will see a modest drop in April, but I’m hoping for sideways. We are basically searching for the bottom right now,” a third source said, while a fourth said he’s anticipating another down market.
“Probably not as large as March as I’m not hearing much optimism on mills order books going forward,” he noted.
A final source said he could make an argument for either pricing scenario.
“It can be argued that we'll be generally sideways but too often if that's what dealers are hoping for, or saying they'd be satisfied with [sideways], it tends to be softer,” he said. “One could argue sideways or maybe a token drop in some areas. It may actually be a mixed bag region to region.”
The April buy cycle is expected to start in approximately 2 weeks.