Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

US September ferrous scrap has historically started after the Labor Day holiday, which falls on Sep 6 this year. However, in a rumored departure from the normal, Midwest mills may begin trading as early as Sep 2. 


Expectations range from down $20-40/gt on secondary grades such as shredded, #1 HMS, and P&S 5ft to $30-50/gt down on prime grades depending on region, both against August settled prices. Market participants in Texas acknowledged an outlook of $20-30/gt declines on secondary grades while a few in the Southeast noted the same expectations amid rumors of some mills trying to lower prices by $40/gt. The expectation on the sellers’ side for Detroit offers at moment are mostly down $20/gt on secondary grades and $40/gt on primes.


In the Southeast, one of the largest US steelmaking companies noted the potential for an attempt at minus $40/gt on secondary grades against August settled prices. It is unclear whether Hurricane Ida will firm up offers given its effect on the river market. 


Moreover, not all scrap dealers report a surplus in scrap volumes on hand or anticipated in September. On the one hand, large dealers report an oversupply of ferrous feedstock while smaller yards report a slowdown in peddler feedstock over the past two months, especially, August. A market participant noted that the variance may be the large number of industrial maintenance projects, which have been a windfall in scrap feedstock for larger scrap processors. Prices are also anticipated to soften due to the lack of ferrous exports in the South. 


The Ida impact

Hurricane Ida has shut down river access and is anticipated to affect barge flows. Access to barges has already been low for the past two months, but the hurricane has now pushed unloading schedules for all commodities including coal and grain delaying their availability for scrap loading in early September.


Some scrap yards contacted in Louisiana beyond the coast are fully operational except for employee shortages due to family evacuations or energy access because of the hurricane’s impact. Coastal cities and ports though were severely affected with energy losses, limited mobility, and at times no fuel. 


Regional markets falling in the path of Ida are affected by the need for clean-up efforts, when that may safely begin, and when normal operations may resume. Hurricane-caused scrap is predicted to grow towards the end of September which may add to scrap feedstocks for October. 


Hurricane Ida is causing some concern regarding Basic Pig iron (BPI) imports entering New Orleans port as well. There are reports of delayed shipments that have been given indefinite timeframes until there is more clarity on power restoration. 


The DSV New Orleans informed on Aug 31 of closures at the Port of New Orleans due to Ida after it made landfall on Aug 29. The New Orleans terminal and ports America for container operations will be closed until further notice. This includes Coastal Cargo, Gulf Stream Marine, and Ports America for breakbulk operations.


One US broker is awaiting a BPI vessel into Nola and mentioned it has been delayed on weather conditions, lack of power, and operator concern over being able or available to safely unload at this time. 


A separate US consumer waiting on BPI shipments from Nola has not encountered major issues yet, though they confirmed some barges arriving at Nola have been held up, delaying off-loading. Flooding conditions are also a concern and will likely cause scrap or BPI shipment delays along the Ohio and Mississippi rivers.


Any additional relevant concerns will continue to unfold in the coming days. Some Midwest markets are not discussing related problems yet on lack of details to gauge full consequences, while others in Southern regions are more impacted and challenged with the next steps. The September domestic scrap market may firm up somewhat as the material flow may constrict and with Nucor’s DRI plant down.

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