“If there was demand, we would have seen it by now. Mills are sitting on adequate scrap piles and mills can feed themselves from their own yards based on the existing demand,” a southeastern shredding source said, adding that mills are seeking to drop shredded scrap prices by another $20-30 per gross ton in the October monthly trade.
Scrap prices for No1 busheling have dropped every month since June and shredded scrap has fallen every month since May.
The trade is expected to suffer from an unusually late start once again, this time due to the Yom Kippur holiday. The market is expected to kick off on Thursday October 6.
Monthly negotiations have been dragging out for most of the year; there is no longer a guarantee the deal making will be concluded by the 10th of the month.
Many mills issued end-of-month cancellation notices for unshipped scrap on Friday September 30, which is usually an indication the market is expected to have a correction.
Prices are already at a steep contrast from the start of the year. In Chicago, No1 busheling was $580 per gross ton and shredded scrap was $540 per gross ton on January 3.
After the September trade, the busheling price in Chicago dropped 33.67% to $385 per ton and shredded scrap price dropped 21% to $425 per ton.
Where the market is headed is anyone’s guess. With shredded scrap selling on par or higher than busheling, some sources said that shredded scrap will suffer the biggest drop to restore the normal spread, which should be $25-40 per ton.
Others think prices will fall $20-30 per ton across the board except for plate and structural scrap, which is in tight supply and sought after by mills.
Still, others think prime scrap could fall $50 per ton, which could make shredded scrap much more expensive compared to busheling scrap.
“It will be very interesting to see how this plays out. There is no demand. You could see prime take a significant hit this month and you could see Detroit and Chicago could do entirely different things,” a seller into Detroit and Chicago said.
A Pittsburgh seller said: “Nothing good is ahead and will take feeling some pain before things improve and we are not there yet.”
The Pittsburgh seller said tightness in raw material supply will eventually stop the downward momentum. “The market will hit the floor on raw materials before market hits the floor on steel prices. Scrap will rebound first on short supply when recovery starts,” he said.
Mill-owned shredders are not offering good cues on where the market is headed. One mill-owned shredder was sideways on shredder feed, while another one dropped its scale buying price by $20 per ton.
Shredder feed prices were unchanged to lower this week.
Fastmarkets’ price assessment for steel scrap shredder feed, fob Midwest was $139.53 per ton on Monday October 3, down 1.13% from $141.13 per ton on September 26.
Fastmarkets’ weekly price assessment for steel scrap shredder feed, fob Southeast was $122.69 per gross ton on October 3, down 0.82% from $123.71 per gross ton the prior week.
And Fastmarkets assessed the price for steel scrap shredder feed, fob Ohio Valley was unchanged at $153.74 per ton on Monday.
