US domestic scrap began to trade down by $10/gt on primes and $20/gt on cut grades at the start of February trading on Tuesday.
The industry was expecting this downward shift after order cancellations at the end of January, mild weather, softer export volumes, a shorter month, heavier volume buys in January, and lower scrap import price bids by Turkish mills impacted the overall pricing.
Market participants are reporting a downward trend across all grades with cut grades such as shredded and P&S scrap declining by $20/gt and prime grades such as #1busheling declining by $10/gt compared to January settled prices.
Traders from the Detroit market are reporting a further decline of $30-35/gt from January’s settled prices for scrap grades like turnings that are in healthy supply. Turnings in the Southeast have encountered strong demand in the past few months and are not expected to decrease as sharply in the region.
Market participants inform Davis Index that demand this week is trending similar in February compared to January. The announcement of the latest import scrap deals by Turkish mills reinforced the downward price trend in the domestic market while also moving dock prices down across the country.
Despite the lower early February scrap prices at both the domestic and export level, traders expect a balance between supply and demand that may have exporters struggling to buy scrap to meet the commitments for March shipments. This, in turn, could see dock buying prices ticking up to support pricing into the March trading week.
Domestic demand for finished steel in both the flats and longs markets are expected to continue steady through the month as the mild weather conditions have allowed for industries such as construction to plan projects and their corresponding activities evenly through Q1 2019.