September’s ferrous scrap trading settled on Friday with a divergence between several regions as well as price variance within markets based on consumer needs. Overall, primes settled at increases of $20-40/gt with secondary materials settling at increases of $30-50/gt compared to early August contracts.

 

Some springboard deals, mostly for shredded material, were priced at increases of $50-70/gt above August levels given the additional freight. 

 

Detroit was one of the least aggressive markets settling at price increases of $20/gt for primes, $30/gt for cut grades, and $40/gt for shredded material, while primes were generally up $30/gt in Chicago with secondary material up $40/gt, all against August settled prices. 

 

Mills outside Detroit reportedly purchased ample tonnages compared to last month on the growing demand for shredded scrap. Many consumers trying to get the volumes they needed for the grade paid up to $300/gt for remote packages, which is about $20-30/gt above local Midwest delivered numbers.

 

Shredded in Chicago traded at about $275-240/gt delivered consumer with HMS 1&2 (80:20) transacting at $235-240/gt delivered.

 

Markets near the East Coast were weaker than others, despite export strength, as some domestic area mills had lower buying needs. Most grades settled at $20-25/gt increases in Philadelphia, compared to August pricing. In Philadelphia, shredded traded at $285-290/gt delivered US consumer, gaining on #1busheling at $280-285/gt delivered, while HMS 1&2 (80:20) traded around $250-255/gt delivered. 

 

The South and Southeast reaped the highest gains with most deals transacting at increases of $40-50/gt across all grades. The exception was the Carolinas that increased $30-35/gt across all grades as mills did not wish to concede to increases beyond the initial offer points. Market prices were influenced by volume purchases, seller’s ability to package, and mill needs. 

 

Purchases for HMS 1&2 (80:20) were at $290-305/gt delivered with wide transaction levels on #1busheling in the Arkansas market at $300-340/gt delivered to consumer and shredded at $290-335/gt delivered. In Texas, grades increased by $35-40/gt across all grades; P&S5ft, for example, traded at $290-300/gt delivered. 

 

Market participants are speculating that the upward price momentum experienced in September trading will likely carry forward into the next month as US mills continue strong buying programs. However, increases of the same magnitude are not expected. The expectations range from sideways to up $10-20/gt against September settled prices. 

 

Mills reacted to higher demand on steel center restocking and higher automotive activity, but all sources point to the fundamental need for finished steel goods demand to begin to increase in Q4 2020 to sustain additional gains in scrap prices. The September scrap increase is supporting recent price announcements by mills of up $40-50/nt on flats, plate, tube, and most recently, rebar. 

 

Moreover, several scrap yards expressed that they expect better scrap feedstock flows in September compared to their recent August experience reducing pressure on the supply side.

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