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“Rumors are August is down another $40 [per gross ton] in Texas. Meltshops are running 65-75% shred for the melt, but [things] are starting to look worse,” a seller into Texas, who estimated that a $40- to $50-per-gross-ton price cut could be on the horizon for shred, told Fastmarkets.
A Midwest shredded scrap source said that “mills have been spoiled and got so used to good [finished] steel prices. Now shredded has dropped too much and shredder feed is drying up.”
That source heard that shredded scrap prices could drop by $25 per ton in August.
The uncertainty in the domestic secondary scrap market comes amid a recent uptrend in export pricing.
Last week, exporters on the West Coast booked a pair of bulk cargoes to India at increased prices. Rising demand from Turkey prompted East Coast sellers to raise their prices as well, but market participants in the area were concerned that the higher prices would not be sustainable.
“Shreddable scrap is drying up, but I hear export will be dropping $30 per tonne over the next $30 days,” an Alabama broker said, echoing concerns from exporters that the current prices will not last.
Meanwhile, steady declines in hot-rolled coil prices have been dragging down No1 busheling prices as well.
Fastmarkets’ daily steel hot-rolled coil index, fob mill US has gone down from a recent high of $75.65 per hundredweight ($1,513 per short ton) on April 8 to $43.28 per cwt ($865.60 per ton) as of Friday July 15.
“I don’t know whether we’ve found the bottom yet,” a Midwest mill buyer, who consumes prime scrap, said. That mill buyer expects supply of cuts and shred to shrink in August, but said that mills will adjust their buying programs to include more busheling following its precipitous price decline over the past two months.
Such an adjustment could slow the price fall for busheling. At the same time, reduced demand for cuts and shred could limit the impact of tight supply on prices for those grades.
Another mill buyer said that weakness in hot-rolled coil mill order books will continue, suggesting steelmakers will have modest buys in August.
“A guy I sell for said he is holding his scrap for higher prices. I told him he can hold it until next year because it isn’t going up this year,” the Alabama broker said.
Fastmarkets’ regional shredder feed price assessments were mixed over the past week, with different yards in both the Southeast and Midwest alternately raising and lowering their prices from the week earlier. Only shredders in the Ohio Valley region refrained from lowering their prices.
“No one is getting any flow into their yards, and [most] are not busy. Other people I have talked to are saying the same thing,” a recycler in the Ohio Valley region said.
Fastmarkets’ weekly assessment of steel scrap shredder feed, fob Southeast was at $132.36 per gross ton on Monday July 18, unchanged from July 11.
The price assessment for steel scrap shredder feed, fob Midwest was $151.92 per ton on July 18, up 0.53% from $151.12 per ton on July 11. And that for steel scrap shredder feed, fob Ohio Valley rose to $167.85 per ton on Monday, up 2.80% from $163.28 per ton on July 11.