Metal & Oil & Gas News – Nctv.net
Prime scrap moved up $20/lt and obsolete scrap moved up $10/lt in early trading around Detroit on Wednesday, while a bid/offer gap between steel mills and their ferrous scrap suppliers kept things at a standstill in most other regions.
Aggressive demand for prime scrap by one major mill group stoked supplier optimism. The major mill group was seeking prime scrap from remote areas via rail car on 60- and 90-day terms, rather than the typical one-month deals made in the US market.
“I believe the rest of the mills in our area will fall in line,” one Midwest broker said of the up $20/lt move on primes and up $10/lt on obsolete grades. “Demand is not great here in October but mills are looking ahead, especially the flat-rolled mills, to a strong November-December and they are locking up prime on 90-day index deals.”
Sources said that long-term demand for prime scrap is what allowed suppliers to achieve the up $20/lt move on primes for October delivery they had been seeking since last week.
“If there wasn’t the activity with the 60- and 90-day deals, dealers wouldn’t be as bold as they are about holding scrap,” another source said. “I can see dealers getting entrenched and asking themselves ‘why sell now when in a few more months I get more money for my scrap?’”
West of Detroit, deals were slower to develop and less bullish on reduced demand due to mill outages. One mill was resisting up $10/lt offers on obsolete scrap from suppliers late Wednesday.
The up $20/lt move on primes relative to the up $10/lt on shredded scrap surprised some suppliers, who believed it would be the other way around. The No. 1 busheling premium over shredded scrap is averaging around $50/lt already, the highest level since December 2017 and above the overall 2018 average of $36/lt.
Referring to a Midwest mill scrap buyer one supplier said: “He had to go up $20 on prime to be in the same game. On shred, because of inventory and good weather, I think he was able to get away with only up $10.”
Stoked by a recovery in bulk scrap export prices, East Coast suppliers remain adamant they are expecting up $20/lt across the board on all grades.
Other Midwest and Southeast scrap suppliers on Wednesday were still hopeful to sell all October material at up $20/lt across the board.
“Early discussions are still up $10-$20 in our area,” one Southeast supplier said. “I am not sure up $10 on shred and cuts buys much scrap, at least not in our area.”
Another source who believed that shredded scrap would end up higher than up $10/lt outside Detroit said southern US mills “will not want to pay up $20/lt on primes. We’ll see who wins.”
Source: Platts
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