The early outlook for US May ferrous scrap trading is leaning towards a sideways market, with some upward potential for certain grades depending on the region. Prices, material flow, supply, and demand will remain in balance and are not projected to make any major changes in Q2 2021.
Prime grade #1 busheling is still in short supply on the semiconductor chip shortage, which should hold the market up and prevent any price deterioration for other grades. Prime grades are expected to remain unchanged at the lowest end, however, due to limited capacity the grade could see a modest gain.
Secondary grades including #1 HMS, P&S 5ft, and shredded are also projected to remain firm with some potential to regain from their declines in April. Scrap volumes and the direction mills take will make an impact, but secondary grades are expected to hold unchanged to possibly up $10-15/gt with some participants expecting that mills should give back the $20/gt lost last month.
Mills could require higher volumes of secondary materials including shredded to compensate for the lack of #1 busheling in May. This relates to shredded and #1 busheling’s large spread of $120/gt or more based on region, which may also add price pressure to secondary grades while also placing them in higher demand.
Mill order books remain strong with lead times continuing at around nine weeks. Steel prices remain above normal with a spread of $973-986/gt between hot-rolled coil (HRC) and #1 busheling. In Chicago, HRC is at $1,499-1,521/mt ($1,360-1,380nt) fob mill compared to #1 busheling, which is at $550-560/gt. Because of this, a few sources believe prime grades should increase about $20/gt with secondary grades up $40/gt to compensate for all market factors. HRC prices are up $66-88/mt compared to spot prices early in April.
Some shredders in the Midwest have raised inbound shredder feed material by $20/nt to generate more flow. However, some of these shredders are reportedly lagging other regions on prices paid for intake material.
Rebar prices are reported at $904-948/mt ($820-860/nt) fob mill, up $11-33/mt against late March levels. Rebar fabricators are reporting shortages on-site and difficulty getting loads into shops from mills. While tight spot supply from mills is a factor, the biggest influencer is truck availability and rates that have hiked 20-100pc from December depending upon the lane and whether direct carrier or broker.
Turkish export scrap prices increased this week with the latest HMS 1&2 (80:20) import scrap deals at $425-427/mt cfr supporting US-origin scrap offers above $435/mt cfr on the grade. Prices on the grade were trading at $430-440/mt cfr early in April but dipped below to $416/mt cfr from Venezuela, which translated to $421-422/mt cfr US-origin. The low Turkish bids along with increased COVID-19 cases in various countries in Asia caused the markets some hesitation.
With tight container availability, more bulk buys from both Coasts to destinations in Asia, Latin America, and the Middle East are expected to adequately support export demand in May.