A US East Coast bulk ferrous scrap cargo sold late Monday has helped establish a floor for domestic US scrap pricing, sources said Tuesday. The 40,000 mt cargo was priced at $226/mt CFR Turkey 80:20 heavy melting scrap basis.
Bulk export sales from the US dipped as low as $208/mt CFR Turkey HMS 80:20 basis on September 29. Since the conclusion of the October scrap buy week around October 7, export prices have steadily risen, supporting suppliers' belief that the market reached a bottom in October.
Obsolete scrap prices fell $30/lt in June, $10/lt in July, traded sideways in August, fell $20/lt in September and fell $20/lt in October.
"This [bulk export cargo] will support a stabilizing effect on the domestic [obsolete scrap] markets over the coming weeks," one Southeast supplier said.
Half of the cargo sold late Monday contained shredded scrap priced at $231/mt CFR. Platts assessed US East Coast shredded scrap at $216/mt FOB.
One US scrap supplier said the cargo sets "more than a floor."
The price of $216/mt FOB East Coast for shredded scrap equates to about $219/lt and the supplier said if a Midwest mill would have to reach for coastal scrap, it would have to pay around $240-$245/lt delivered to bring material into Ohio or Indiana. October shredded scrap prices settled at $200-$205/lt delivered Midwest mill.
No one, however, is ready to forecast that Midwest mills will need to springboard material into their regions. Mills have not had to reach far to meet their reduced scrap buying requirements during the second half of 2016 due to depressed finished steel demand.
"Export seems to be the only driver we have right now," one Midwest supplier said.
Dealers are reporting a further reduction of around 10-30% in already slow scrap inflows into yards after October price drops.
"Cut [grades of scrap] are becoming scarce as [demolition] slows and dealer flows are suppressed by low prices," another supplier said. "I see November in balance to a slight supply deficit on some grades by region, even with weak mill buys."
One broker was more bullish on November scrap prices.
The "market is at the bottom," he said. "Minimally, it will bounce to September levels in November [and] we will see further advances in December and January. There is no downside to scrap."
