In the middle part of November, scrap market sources throughout the US agreed that December settled scrap prices were likely to trend upward due to several factors, such as seasonal weather factors, including cold weather and snowstorms, that are having a negative impact on scrap collection, the year-end holiday season, and still-rising domestic HRC prices.
This week, although sources are still optimistic that December prices are going to climb, the big question is “by how much.”
For example, a source in the Southeast said that while he believes the market will be up $30-$40/gt on primes and up $20/gt on cuts and shredded, a source in the Midwest said he believes the market will settle at “a very firm sideways.”
“No one is really interested in shipping much [scrap] before the end of the year, running mill inventories down a bit,” he said, adding that scrap processors are likely to chase volume so they have some inventory on hand to start off the new year. “There may be a $10-20/gt uptick if regional needs dictate,” he said.
A second source in that region said he believes that the market as a whole will settle up at $20-$30/gt in December, whereas a third said he also believes December will have some upward pressure, which he believes will be mostly linked to reductions in inbound flow into scrap yards.
“[Higher HRC prices] will help push pricing up as well,” he continued.
For example, as of this week, US HRC spot market prices have risen to $48-$50 cwt. ($1,058-$1,102/mt or $960-$980/nt), FOB mill, and per Monday’s price increase announcement from Nucor, it appears that sheet mills are officially pushing for $55 cwt. ($1,213/mt or $1,100/nt) FOB mill HRC base pricing.
A final source said he also believes that primes could potentially settle up by $40/gt depending on the region, and that cuts and shred could settle up by $20-$30/gt from November settled levels.
“There is some decent momentum going into the year-end and Q1,” he said. “No one wants to cut it too close going into and out of the holiday period.”
The December buy cycle is expected to start in the early part of next week.