Pittsburgh — Momentum is building for the August ferrous scrap US market as attention shifts to the supply side following four months of prices exploring the downside.
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"I think the story now is supply. It's flipped from consumption and demand to supply," said one broker. "The switch flipped and now we've got mills that have under bought (in July)."
After downward moves in April through June, and a July scrap buy week that saw pricing start at down $10/lt before finishing sideways, he said the scrap supply chain is now fatigued after the last several months.
"It was embarrassing to ask for another $10 down after three straight months of down money," he said, adding that heading into August the market could be up $20-$30/lt.
Another trader agreed with the supply side being the driver of the August market. "I don't think there's going to be a lot of scrap sitting unsold going into [next] month. I don't think there's as much [shredded scrap] available as there was coming into last month," he said.
The same trader added that mill order books filling up and sheet steel price increases gaining traction would provide tailwinds on the demand side.
"Going into August, I don't see how it's not up some money," one mill buyer said. "Order books are still strong and with the second [sheet] price increase seeming to stick, [mills] will need scrap to be up to support it."
Another source believed buyers that went down $10/lt in July will need to go up $20/lt to have a chance of procuring scrap from outside their local region.
"It was the wrong thing to do -- the down $10," a Midwest supplier said. "I don't think people recognized the huge change in market dynamics."
S&P Global Platts' shredded scrap assessment rose 50 cents/lt on Friday to $260.50/delivered Midwest mill.
"Momentum is building for August, today I am calling it up $20," said another supplier.
--Joe Eckelman, firstname.lastname@example.org
--Edited by Joe Innace, email@example.com