The domestic ferrous scrap trade for August formally began a tad earlier on Tuesday afternoon after a couple of key Detroit area mills announced price decreases of $20/gt on prime grades. The mills kept shredded and cut grades unchanged from final July settlements.
For the most part, price announcements on Tuesday were in line with projections throughout July, regarding some Midwest markets, although the South is showing stronger fundamentals. Several sellers are hoping for the market to settle at prices that are greater than those at the start of the trade week on Tuesday, as early mill offers for scrap have been progressively mounting in some regions.
Detroit has been described as one of the weakest markets in the Midwest especially with regards to primes that have been oversupplied without consumer demand to match availability, and industrial prime generation that has been gradually increasing.
With primes dropping by $20/gt the week could conclude at around $250-260/gt delivered Midwest mill for primes. If shredded transacts at unchanged prices, the grade will remain at around $235/gt, on average delivered Midwest. The gap between the two grades reached an average high of $65-70/gt in June 2020, which could now tighten further and drop to about $15-25/gt.
Surrounding markets are expected to accomplish similar or stronger price trends as some early trade activity is reported in other US markets. In the South, there are confirmed transactions at unchanged prices compared to July settlements.
Some Southeast transactions are reported at sideways prices, as well with some talk pointing to the region being in a stronger position with the possibility to gain price increases by about $5-10/gt.
East Coast dock collection prices have been gradually increasing during the past month by about $15/gt on average, since July 7, with further upside potential amid strengthening export sales and demand.
Market participants already project August will be the bottom of the market and envision some sellers may hold prime grades until September when the market is expected to trend up.