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US ferrous scrap prices talked flat to down for June



Global Steel & Raw Materials

June 1, 2017 -- By Nicholas Tolomeo





US ferrous scrap prices for June were heard to be flat to down slightly from May, sources said May 31, with no expectations of a price increase, though mills and dealers were hesitant to forecast a price decline.


June scrap buy week discussions were in preliminary stages on May 31 as the possibility of trading falling into next week grew more likely.


Only four mills were confirmed to have canceled undelivered May scrap orders by late May 31, the last business day in May, and three of those cancellations only pertained to shredded scrap.


"On Tuesday (May 30) this thing seemed that it was not that far apart and I was optimistic that we would be wrapped up by Thursday (June 1)," one mill buyer said. "Now, I am not so sure. I think you will see a majority of trading slip into next week. There is a lot of shred out there, what is the downside of canceling? You are not going to pay up next week."


Further confusing the market is the lack of rail car availability that significantly delayed scrap shipments in May. Even with confidence of pricing not moving up in June, some mill buyers indicated they were hesitant to cancel May scrap with so many tons undelivered.


"If mills think they can get away with [canceling], they will do it," one Midwest scrap supplier said. "Rail car is a major problem in getting remote shred into Ohio and Indiana from the East Coast. It is a definite problem: 10-15% of scrap is not getting delivered because of rail cars."


Regionally, the outlook is most bearish in the Southeast, and by grade shredded scrap appears to be under the most pressure.


"I am thinking only shred will be canceled," another supplier said. "I think mills are getting nervous about some order books; Trump and his team may put an end to steel imports in some fashion but that likely won't have any impact on June deals, only July. There is no upside and now we'll just argue about sideways to down $10-$15."


Mill order books have pulled back, finished steel pricing slipped in May, and late May 31 a US bulk scrap sale was heard in the market at $271/mt CFR Turkey HMS 80:20 basis, down from $272-$275/mt, which was the price range for most sales earlier in May.


"I don't think up money is on the table," one broker said. "Your best case scenario is sideways. You could see trading commence quickly if dealers and mills agree on sideways Thursday (June 1) or Friday (June 2). I think there is definitely some scrap out there and mills don't seem to be in a rush and dealers don't seem to be in a rush. The narrative being woven through this market is that mill order books are depleted but then there are mills who have only received half of their [May] scrap today."


The May scrap buy week settled out sideways in most regions for most grades. It was the first month of stable pricing since August 2016.


Platts analyzes other steel and scrap products in this feature:


Iron ore | Scrap | HRC | Rebar | Semi-finished | News


Next commentary: US sheet steel prices drift down as mills concede to lower levels






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