Sao Paulo — After a persistent upward trend since the beginning of the year, mainly linked to tight supply, prices for Brazilian domestic ferrous scrap started to reverse course Wednesday, sources said.
The market has seen demand surpassed supply, one dealer said.
"I wouldn't say there was a real shortage of scrap or low generation, but we weren't expecting companies demanding big volumes of scrap already in the beginning of the year," he said.
Another sourced said that an euphoria had taken over the market, with buyers fearing running out of material, "prompting prices to boom."
"Everyone was alarmed by the US Section 232 and the [trade] measures taken by the [US President Donald Trump] ... so some market participants started building large scrap inventories, which generated a huge shortage in the market for spot negotiations," he added.
Now, Brazilian scrap supply and demand seems to be balancing, returning to normal levels, sources agreed.
"Moreover, the recovery of main steel-consuming segments such as the automotive industry has been feeding back the chain: consuming steel coils, producing steel scrap," one added.
Several dealers reported steelmakers reducing bids' list in August by Real 50-100/mt for local ferrous scrap.
"In fact, prices are lower across all Brazil for both steel mills and foundries," another source said.
Another player did not see the lower prices in Sao Paulo state yet, but pointed to the decrease in the south of the country.
"I observed lower prices in the Southern region, down around Real 50/mt so far. In other regions people are talking about the drop, but nothing concrete yet," said the source. "Still, there are dealers trying to keep higher prices even with the lower perspective."
S&P Global Platts weekly assessment for clean steel scrap price was cut by Real 40 to Real 950/mt ($244/mt). The tradable range of offers, bids and deals went down to Real 900-1,000/mt, delivered to mill, no taxes included.
The heavy melting scrap I & II assessment is lower Real 5 to Real 795/mt, based on a Real 780-810/mt range, delivered to mill.
Platts turnings scrap assessment remained steady at Real 600/mt, based on a Real 580-620/mt range, delivered to mills.
The scrap survey is mainly focused on negotiations of 500-2,000 mt in the Southeastern region of Brazil. Prices negotiated in the Southern region of the country are reportedly 20% below the assessments, according to local sources.
