US domestic ferrous scrap trading concluded on July 10 with price drops of $20-40/gt on prime grades and $0-20/gt on shredded and cut grades from a month earlier.
Markets varied, but the Midwest recorded declines of $10-20/gt on cuts and shredded and a decline of $40/gt on primes. The South had stronger fundamentals than the Midwest, with cuts and shredded trending sideways and prime declining about $20-30/gt. In the Southeast, markets decreased by $10/gt on cuts and shredded grades, with prime grades trending down by $40/gt on prime.
Market sentiment has been bearish for the past month as scrap volumes outpaced mill demand. Material for July was offered early and TBDs were lined up quickly so that excess tons might be placed because consumer needs have been limited. Overall settled prices were below earlier forecasts, which ranged from sideways to $20/gt declines across most grades on lower-than-anticipated demand. Prime grades, such as #1 busheling, were slated for steeper declines than cut grades because of higher industrial production from the automotive sector, but limited demand shrunk the spread between primes and shredded scrap.
Mills are operating at lowered utilization rates—around 55pc capacity—and some reported having the ability to use internally generated scrap or dip into their abundant inventories.
In Philadelphia, the Davis Indexes for #1busheling declined by $41/gt from $280/gt to $239/gt delivered. P&S 5ft declined by $20/gt from $230/gt to $210/gt delivered.
In Chicago, the Davis Indexes for #1 busheling declined by $42/gt from $317gt to $275/gt delivered and shredded dropped by $20/gt from $249/gt to $229/gt delivered.
In Birmingham, the Davis Indexes for #1busheling declined by $36/gt from $315/gt to $279/gt delivered, while HMS 1&2 (80:20) decreased by $7/gt from $240/gt to $233/gt, and P&S 5ft declined by $12/gt from $258/gt to $246/gt delivered.
In Dallas, the Davis Indexes didn’t decrease as much as some other regions. #1busheling declined by $25/gt from $312/gt to $287/gt delivered, while HMS 1&2 (80:20) only decreased by $4/gt from $238/gt to $234/gt delivered. Some sellers did not place material until Friday because trading was slow and limited.
The early outlook for August suggests prices will remain unchanged following precipitous declines, but there is some upward potential as activity in the industry gradually grows. Several sellers in Texas reported lower volume sales at sideways positions, with buyers offering lower prices at the end of the week, which sellers declined. In the South, several sellers similarly reported resisting prices decreases next month should the market move that way.