US ferrous scrap dealers have been emboldened by downstream and overseas strength in recent days, sources said Tuesday, raising inbound feedstock prices and mid-month offers to mills.
A Northeast mill's offers were $35/lt higher on Tuesday for secure shredded scrap at $230/lt delivered mill. Dealer offer prices were reported as high as $280/lt and $290/lt delivered mill for shredded scrap and No. 1 busheling, respectively, for deliveries into the Southeast, prices that would represent an increase of $40-$50/lt for most mills in the region compared with early March purchases.
On bids and offers and market sentiment, Platts raised its daily shredded scrap assessment by $20/lt Tuesday to $220-$240/lt delivered Midwest mill.
"This thing is already over-hyped," one mill buyer said. "I think the 'smart' move would be [up] $20, but that's highly unlikely. My guess is somewhere north of $30. At this point, I think some people think the April market is up infinity. The closer it gets to [up] $40 or $50, the more likely the chance there will be a short-term correction."
Since the March buy week wrapped up with prices increasing $20/lt, the market has anticipated an April price rally on a supply-demand imbalance, strengthening scrap export markets and finished steel price increase announcements.
"[The] domestic market is really going to pop," one scrap supplier said. "Mills are [going to pay] at least $30" higher.
The latest US East Coast bulk scrap export sale was finalized at $229/mt CFR Turkey HMS 80:20 basis this week and now offers are being reported around $230-$235/mt to Turkey. Traders are offering around $215-$220/mt FAS Newark for containerized shredded scrap.
Another mill buyer had attempted to make mid-month purchases, but opted to stay on the sidelines this week. "[We're] just sitting back. No one seems interested [in selling] today unless they can gouge you," the buyer said.
A broker said there was "a lot of hand-wringing about low inventories." He added that there has been an improvement in scrap volume flows over the past two weeks.
"So we get [up] $20-$30 this month, flows will get much better come April," the broker said.
