A Detroit-area mill entered the August scrap market shortly before noon EDT Wednesday, offering to buy all grades of scrap up $10/lt from July levels, market sources said.
The offer drew mixed reaction among the supplier base, most of whom are anticipating higher prices to develop this week.
"They are testing the market at up $10," one scrap supplier said. "I would be very surprised if that buys a lot of scrap."
One supplier said the mill was only offering to take half the tons he had sold them the prior month. Others reported supporting the mill at up $10/lt and selling at those levels late Wednesday.
A Midwest broker reported early talks of up $10/lt from mills in Chicago and Iowa as well as other areas that, like Detroit, are further insulated from the East Coast export strength that has dominated conversations this week.
"It sounds like $10 is the number in Detroit and will be the number in Chicago and Iowa," he said. "We're still waiting on firm numbers out of Chicago and Iowa but that is the talk right now."
Others showed far more resistance to the initial up $10/lt offer.
"Our yard isn't selling a pound at up $10," a supplier said. "We are moving elsewhere. We have a $10 divide right now between mills and suppliers. I don't know anyone committing to a price at up $10. This thing could wrap up pretty quickly if we get to up $20. This $10 stuff is just not going to happen."
Suppliers noted the mill entered August with a significant scrap inventory position that could allow it to reduce its overall buy and avoid paying higher prices to pull out-of-region material in.
Southeast mills seeking to buy scrap on the Mississippi River were heard offering up $20/lt late Wednesday.
"Domestic consumers are in a bit of a sticker shock," one coastal supplier said. "They are recognizing that to own shred off the coast, the pricing has to be in the $340/lt delivered range."
Platts maintained its daily Midwest shredded scrap assessment at $300-$310/lt delivered mill on Wednesday. The assessment is up $10/lt from July.
Scrap is expected to command higher prices in Ohio, in coastal regions and throughout the Southeast.
"Mills in Ohio are going to have to pay more than up $10," a local supplier said. "We are still playing cat and mouse in Ohio."
East Coast bulk export sales moved up further on Wednesday as an exporter sold at $329/mt CFR Turkey HMS 80:20 basis, up $2/mt from sales that circulated the market on Tuesday. US bulk scrap export sales to Turkey are now up $35/mt since the first week of July.
"For as strong as export seems, there are mixed signals domestically," another supplier said. He noted multiple up-$10 indications from Midwest mills.
Mills with reduced buys will look to avoid reaching to coastal regions or the southern river market to pull scrap. Those regions are becoming more expensive to buy scrap due to the export strength.
The prime scrap tightness that has continued for most of the year continues to be an issue, further compounded this month by an outage at Nucor's Louisiana DRI facility. Last Tuesday Nucor confirmed the facility was taken offline for repairs.
"We are selling no scrap right now at up $10," an Ohio supplier said. "There are dealers east of Pittsburgh that are not even selling at up $20. No dealers are carrying big inventory and there is no prime stockpiled anywhere. The primes just are not coming in."
