Impasse on the horizon for US ferrous scrap market

The best-case scenario would be a “soft sideways,” with prices either unchanged or down slightly, in November versus October following six months of consecutive drops in many US markets, multiple sources told Fastmarkets.

Poor inflows of material into yards, logistical issues pertaining to shipments — particularly the drought curtailing barge freight along the Mississippi River — and accelerating export demand from Asian buyers, especially for shredded scrap, has shored up marginally-better sentiment in certain markets.

But declining hot-rolled coil prices, which have fallen to the lowest level since late 2020, will likely have a tempering effect on any potential for price increases.

Fastmarkets’ steel hot-rolled coil index, fob mill US was calculated at $35.17 per hundredweight on Friday October 21, down by 2.28% from $35.99 per ton the day prior and its lowest level since it was calculated at $34.43 per cwt on November 6, 2020.

“Mills may be able to go down in some [regions] in November, but India is [importing] a lot of shred. The market is close to the bottom. Maybe prices won’t go up, but supply is getting really low. Mills can’t get material at the price they’re currently giving me. Grades are going to export, people are heard to be putting in shredders,” a seller in the Ohio Valley said.

“Of course the market will be based around demand from mills, but the supply side is terrible. Flows are terrible. I won’t be selling at down money,” the same source said.

Sources in the Southeast also reported that the market could incur a more modest drop compared to prior months.

“As of now, [the market] looks [like it will settle] soft sideways,” a source with presence in the region said.

“I definitely don’t see any possibility of prices going up in November. I think they will stay sideways at best, but I think they will drop to a degree,” a second source said.

One mill in the Southeast has reportedly issued regular suppliers with a restriction notice on intakes for certain grades in the week ended October 19, further crimping expectations for November’s pricing.

Sources in the Midwest continued to predict further drops for the most part, with many expecting a decrease at least $20 per gross ton across the board next month.

“Demand is terrible, but so is supply,” a Midwest seller said of the apparent impasse in the market.

Shredder scale prices diverged in the week to Monday October 24.

Fastmarkets assessed price of steel scrap shredder feed, fob Ohio Valley unchanged at $151.77 per gross ton on October 24.

Fastmarkets’ assessment for steel scrap shredder feed, fob Southeast was $123.20 per gross ton on October 24, up by 0.42% from $122.69 per ton the week prior.

Fastmarkets assessed the steel scrap shredder feed, fob Midwest at $122.59 per ton on Monday, down by 0.57% from $123.29 per ton the week prior.