US Scrap Trends Outlook: November

The tentative resolution of the United Auto Workers' strike, a reduced slate of hot-rolled mill outages in November versus October and surprisingly robust export activity are bolstering the usual seasonal optimism going into November's ferrous scrap trade

US steel scrap prices ahead of November trade

The Trend Indicator has rebounded into bullish territory, at 61.4 for November compared with a resolutely bearish 45.6 in October. This month’s indicator is at its highest since March’s outlook, when it was 65.2. The Outlook’s prediction model allows for an average month-on-month price increase of 5.1%.

Respondents to the Outlook survey were fairly evenly split on the trajectory that scrap prices may take in November. A slight majority – 42.11% – anticipate that prices will move higher month on month, with 40.35% expecting prices to trend sideways over the period. Just shy of a third of those surveyed – 31.58% –  attribute this expectation to increased demand for scrap. Meanwhile, 39.29% of respondents believe inventories will be unchanged in November, with a matching 39.29% seeing them lower.

Respondents still expect prime scrap grades to outperform their cut and shredded counterparts over the next three months. The tentative resolution of the United Auto Workers’ strike – culminating with the third of the Detroit “Big Three” automakers, General Motors, agreeing to terms on Monday October 30 – should loosen prime availability in the longer term.

Generation of those grades was dampened by a dearth of stamping activity amid the strike and will take time to recover, bolstering prospects for prime pricing next month. Recovering finished steel demand from automotive post-resolution is a further boon for scrap demand in the longer term.

Market participants see the potential for a minimum $20-per-gross-ton increase on prime grades in November. Two major US hot-rolled coil producers increased base prices to $900 per ton at the end of October, and this may stymie any potential drop in raw materials prices.

Demand drivers and steel market outlook

Demand for the coveted HRC feedstock is expected to increase over the period, with only four HRC mill outages slated for November compared with 11 in October, per Fastmarkets’ estimates. Higher pig iron prices, now assessed at $450 per tonne CFR Gulf for large tonnage, may also switch mills’ preference to prime scrap, which was assessed at $400 per ton in the benchmark Chicago market in October.

Export volumes booked by the United States’ biggest customer, Turkey, lag those of September by only two cargoes, with the region securing 10 US-origin cargoes despite lackluster rebar demand exacerbated by the Israel-Hamas war. Turkish mills are reportedly operating hand to mouth amid low supply, and they were forced to re-enter the US market at an increase in a cargo deal heard on Tuesday October 31.

Confidence in market direction has surged to 61% in November compared with 56% in October, suggesting that participants are increasingly aligned in their view that the market is showing strength.

Make sense of the US steel scrap market and track the critical indicators impacting steel scrap price movements in our latest outlook.

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