02/05/14 – Shredded ferrous scrap oversupply to lead to softer US May prices

 
US ferrous scrap yards began shipping material to steel mills for May melting requirements this week on a to-be-determined (TBD) pricing basis, with pricing talks ongoing and expected to settle early next week.Pricing opinions were mixed Wednesday, with most players saying shredded scrap was the most abundant of the major grades while cut grades and prime scrap had tighter availability.”Things are going to take a while to develop,” one Midwest scrap dealer said. “I don’t see a reason why anyone is going to buy scrap this week. There is plenty of shred around, cut grades can go up a little bit and primes could go up, there is a lot of pressure [from steel mills] to get quick shipment for primes.”

In mid-April, prices were mostly expected to wander sideways or slip lower as a result of a drastic increase in scrap flows due to improvements in the weather, but sources indicate that steel mill demand has increased over the past month.”I’m getting mixed signals on domestic” scrap, another dealer said. “Markets appear to be firming slightly. It seems like we’re moving from a soft sideways to a firmer market.”At least one Midwest mill has been offered shredded scrap by a dealer at prices $10/lt below April settlements.”It seems to be everybody is talking … sideways to plus or minus $10,” one Midwest mill source said. “I highly doubt that it will be plus. You could see busheling go sideways and [shredded] be down $10. There will be a lot of [shredded] offered.”The Platts daily assessment for shredded scrap stood Wednesday at $395-405/lt delivered Midwest mill. No. 1 busheling transactions were concluded at similar levels in April.The $40/lt price spread between shredded and No. 1 busheling scrap that existed as recently as November has evaporated as busheling scrap supply grew, mostly due to an increase in manufacturing and imports from Canada.”I think that overabundance of supply of prime that was there two months ago isn’t there anymore,” one southeastern US scrap dealer said.The dealer added that “if we don’t break the cycle we have been in, [prices will settle] Monday or Tuesday. I haven’t heard any [mill] interested in jumping out there. It appears they use this TBD philosophy to keep scrap moving.”

 
Source – Platts.com