US mills cancel undelivered August scrap as bearish sentiment grows

Pittsburgh — Multiple US mills canceled undelivered August scrap on Thursday into Friday, as bearish sentiment continues to build heading into the September ferrous scrap buy week.

A Detroit-area mill canceled undelivered August scrap effective August 31 on Thursday morning, with several other mills following.

"As expected, I'm starting to get a lot of mill cancellations for end of month," said one supplier. "They just keep rolling in."

The Detroit-area mill "was first and now everyone is jumping on board, per usual," said another supplier.

The outlook for September was firm following an August buy that saw US scrap prices rise for the first time in four months. But as August went on, a weakening scrap export market, looming mill outages, and global economic headwinds began to weigh on bullish expectations for September.

Recent export deals to Turkey earlier this week from the US East Coast were done at $270/mt CFR Turkey on an HMS 80:20 basis, representing a $9/mt decline from sales completed at the end of the previous week.

The second supplier said he "wouldn't be surprised to see [shredded scrap delivered to US mills] down $20/lt across the board [for September buying]."

One dealer thought the shredded market could move down as much as $30/lt before settling. But another source said that while the market looked weaker, the magnitude and extent of any downside were impossible to gage until trading begins.

Another supply-side source described it as an "odd" market. "Scrap just can't get any traction," he said.

"I'd guess [down] $20 ends up being the number. No sense for dealers to wait until October with a bunch of outages coming," said one mill source.

September scrap trading is expected to begin after the US Labor Day holiday next week, and sources believe trade could stretch into the following week before settling.

-- Joe Eckelman, joe.eckelman@spglobal.com

-- Edited by Joe Innace, newsdesk@spglobal.com