US ferrous scrap market torn between tight supply, tame demand

The US ferrous scrap market remains in limbo ahead of August’s ferrous trade, with participants divided as to whether summer demand from the domestic and export markets will tip the balance of extremely low scrap flows in US sellers’ favor next month

Reports of extremely low ferrous scrap collection rates amid sellers continue to proliferate, giving hope to sellers that cut grades are due for an increase.

“Once scrap prices get as low are they are now, it just doesn’t pay for people to bring it in — gas prices are also high, so there’s very little impetus,” an East Coast seller with domestic and export capabilities said of the current market.

Ferrous scrap export market

Two fresh deep-sea export deals to Turkey from European shippers were heard in a band of $351-353 per tonne CFR for an 80:20 mix of No1 and No2 heavy melting scrap on Monday, July 24 — equivalent to $356-358 per tonne CFR for US origin material — suggesting that the export market to Turkey has more or less stabilized.

Turkey increased its July tally of US deep-sea ferrous scrap cargoes — albeit at incrementally lower prices — to five in the week ended July 21, after a sluggish start to the month.

Prices for heavily-exported No1 heavy melt and shredded scrap were $310 per gross ton and $400 per gross ton in the export-influenced Philadelphia market in July — sideways month on month.

With the last US export sales to Turkey pegged at $354.50-355 per tonne CFR for HMS 1&2 (80:20) and freights for the route most recently assessed at $22-24 per tonne, prices for HMS in that region for August would have to increase by approximately $20 per gross ton at least to be remotely competitive with export in August’s trade.

Domestic ferrous scrap prices

Conversely, the last US export sales of shred were made at $374.50-375 per tonne CFR over the period versus a domestic price of $400 per gross ton in that region; suggestions are that domestic prices for cut grades in that market will need to rise to redress the balance.

Domestic mills are currently out of the discipline of ‘furnace optimization’ and will instead focus on prioritizing the cost effectiveness of their melt rather than production and order fulfilment, increasing demand for cuts and turnings where possible, sources said.

“Export prices are off $30 per tonne, approximately on the high — I wouldn’t be offering or taking any cuts at down money. We are at the bottom of the market, but it’s going to drag bottom for a while,” a seller with a presence in the US Southeast told Fastmarkets.

The summer doldrums are having an effect on prime and shredded scrap generation amid the traditional season for auto production shutdowns.

But since sentiment for hot-rolled coil prices in the US remains weak, there are still questions surrounding the trajectory of prime and shredded scrap in August, despite reportedly tight availability of those grades.

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