Market participants expect prices to move sideways with a potential uptick during US ferrous scrap trading in March, after declines this month eroded the price gains made in January.
The sentiment for US domestic ferrous scrap outlook for February started with an expectation of prices moving sideways after the early January trading week. However, those expectations began to decline as Turkish import scrap prices decreased, finished steel price hike announcements encountered difficult traction, and a mild winter allowed for adequate feedstock flows into scrap yards. As a result, by the end of January, the market outlook veered towards a $20-30/gt ($20-30/mt) decline.
February trading was launched in Detroit with offers down by $20/gt on cut grades such as shredded scrap and down by $10/gt on prime grades such as #1busheling. Prices eroded through the trading week in many areas with late sellers facing lower buying prices than those who sold early in the week.
The Davis Index for #1busheling decreased $14/gt in Detroit, was down by $16/gt in Cleveland, and fell by $19/gt in Chicago and Indianapolis, compared to January settled prices.
The Index for HMS 1&2 (80:20) decreased by $22/gt in Cleveland, by $30/gt in Chicago, by $28/gt in Birmingham, by $28/gt in Houston, and encountered higher losses of $35-41/gt in Philadelphia and Pittsburgh compared to January settled prices.
The Davis Index for P&S 5ft scrap decreased by $20-21/gt in Chicago and Indianapolis, compared to January settled prices, but declined even further by $29-38/gt throughout the Southeast and Detroit markets.
Davis Index learned that most participants believe that US domestic scrap trading in March will trend strong sideways with a slight uptick in some deals.
Projected feedstock flows into yards are being reported at close to 15-25pc in February compared to January depending on region. Some market participants are attributing this trend to fewer work days in February as well as lower scale prices resulting from lower scrap buying prices earlier in the month.
Production demand in mills is expected to remain level and prices in the Midwest are expected to trend strong sideways. US East Coast and Gulf prices are expected to rebound up by $10-20/gt compared to February settled prices on stronger export prices.
Turkish import scrap prices have increased with the latest US origin HMS 1&2 (90:10) deal reported on February 17 at $282.50/mt cfr, equivalent to about $280/mt cfr in HMS 1&2 (80:20), up $20/mt from a deal reported on February 6 for February shipment.