US steel scrap dealers are poised for an increase in scrap pricing during the upcoming July procurement period, but a number of mill buyers are not prepared to concede anything more than sideways pricing yet, sources said Friday.
"Domestic appears to be firming up on reduced scrap flows, good demand and some reduction in prime due to July manufacturing shutdowns," one dealer said. "Looks like a strong sideways."
One major scrap broker offered shredded scrap to an Ohio Valley mill this week at $405/lt delivered mill, a price that represented a $25/lt increase compared with the mill's June buys.
"[That] offer got every shredder expecting a bounce-back month on shred," one Northeast dealer said.
Offers into the Midwest have also been heard as much as $20-25/lt higher than June buys, with no conclusions this week. A number of scrap dealers indicated they are seeking price increases on shredded of $10-20/lt. In contrast to prior months, when shredded scrap prices were under the most pressure compared with cut grades and prime grades, market sources anticipate any potential increase on cut grades and prime scrap to be more muted, ranging from sideways to a $10 hike.
Shredded scrap prices settled around $375/lt delivered mill at the end of the June buy, while No. 1 busheling settled around $400/lt and HMS No. 1 around $360/lt.
Exporters are reported to be aggressively seeking material, lifting dock prices to $300-305/lt delivered dockside for HMS No. 1. Prices have been heard as high as $320/lt for remote high-quality material.
Some mills were successful in purchasing small volumes of scrap at sideways pricing this week and last.
"We think the market is likely sideways," one mill buyer said. "With the [July 4] holiday, it will be curious to see who blinks first -- mills or dealers. It could be up $10, who knows? It is possible. I see it sideways, but who knows? There is a lot of talk of [higher prices]."
Another mill buyer added, "you can count us in the 'not-ready-to-concede' more than 'sideways' camp at this point. I'm getting a sense that there will be a lot of scrap offered up for July due to June scrap being held back, better flow than expected and less automotive impact than expected."
The automotive shutdowns that have historically driven prime scrap prices higher during the summer are not expected to have as much of an impact this year due to fewer shutdowns.
