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Negative sentiment brought about by falling US hot-rolled coil prices and consternation regarding the ongoing United Autoworkers union strike is outweighing any benefits from decent raw materials demand and a healthy export market ahead of October’s ferrous scrap trade, Fastmarkets understands.
The Trend Indicator has once more retreated into bearish territory, with a reading of 45.6 for October compared with 61.3 in September. This month’s indicator is at its lowest since it was 39.4 in July. The Outlook’s prediction model allows for an average month-on-month price decrease of 3.1%.
A majority of respondents to this month’s survey – 43.14% – anticipate that scrap prices will be lower in October, while 37.25% of those surveyed expect prices to trend sideways. Just over half of those surveyed – 52.94% – attribute their expectation for lower prices to decreased demand for scrap. Scrap inventories will remain unchanged, according to 50.98% of survey participants.
There are marginally bullish market prognoses for the onset of 2024, with 54.90% of respondents believing that prices will be higher three months after the October trade. A whopping 74% feel that scrap prices will be higher for the second half of 2024 than current levels.
Prime scrap grades are expected to outperform other grades over the course of the next three months, according to 44.90% of respondents, with 38.78% believing that cut grades will perform best. Only 14.28% feel shredded scrap will have the strongest performance. This assessment comes after cuts and shred trended sideways in September, while prime grades were subject to cuts of up to $50 per gross ton.
Pre-trade chatter points to potential price declines, particularly for prime grades, in October amid a slew of flat-rolled mill outages then. Shredded scrap prices also could fall.
Export volumes to the US biggest customer, Turkey, have been extremely healthy in September despite negligible price movements over the period. Steel mills there have bought a reported 12 cargoes of obsolete grades; this would normally tighten the domestic market, but it may not be sufficient to outweigh negative factors at home.
Confidence in market direction continues to erode, with overall trend consensus dropping to 56% for October from 59% in September and 63% in August.
Make sense of the US steel scrap market and track the critical indicators impacting steel scrap price movements in our latest outlook.