The outlook for the US July ferrous scrap trading week remains sideways to up $20-30/gt against June settled prices depending on grade and region.
The rationale for the uptrend continues to be strong scrap demand from mills, tight inventories especially on structural materials and prime grades, continued strong demand for finished steel for the foreseeable months, and high finished steel prices. Flows also increased for shredded and heavy melting scrap in June.
Some buyers from one of the largest recyclers, which is a subsidiary of a US-based steelmaker were heard promoting a potential sideways market in July due to sufficient scrap flows on seasonality into yards. However, market sentiment is veering towards only #1 HMS showing any weakness due to sufficient inventories depending on the region.
Mill buyers throughout the Midwest and Southeast were heard actively courting sellers to lockdown needed scrap inventories. Some market participants believe that given the strength of iron ore prices and the high, increasing prices on finishes steel, ferrous scrap, especially prime grades, should have room to climb by $30-50/gt against June settled prices. The reality though is that the latest tick down at docks along the East Coast is having them temper that expectation and returning to the most likely $20-30/gt increase.
Normally, July ferrous scrap trades settle after the July 4 holiday that has many companies off on Jul 5 on the federal holiday. However, some market participants noted that the usual seasonal rhythms are difficult to forecast and eager mills could seek to make trades late this week. Others, however, expect to achieve settled prices after the holiday.
Hot rolled coil (HRC) prices were $1,829-1,873/mt ($1,660-1,700/nt) fob US mill in mid-June and are now reported at $1,873-1,940/mt ($1,720-1,760/nt) fob US mill, up $44-67/mt in the spot market.
In rebar, fabricators are receiving notices that prices are likely to increase in July from $1,036-1,080/mt ($940-980/nt) fob US mill spot market level. Fabricators report difficulty increasing volume buys and continued long lead times.