Scrap Prices Held Relatively Steady
American Metal Market’s February prices for #1 busheling (prime) rose $10 to $400/ton (up 2.6%) and shredded scrap (obsolete) fell $5 to $345/ton (down 1.4%). Prices of both grades remain at or near the highest levels we’ve seen since pre-recession 2008 and are roughly double the lows posted over a year ago in November 2008.
Overseas Demand Wanes
We believe temporary weakness in overseas demand from Turkey and Asia has slowed the recent surge in scrap prices. We suspect that as scrap prices have approached billet pricing, there’s been some reluctance to turn “gold into straw” combined with a tapering off in demand in China ahead of the holidays. However, tight supply is keeping scrap prices from declining.
Scrap Flows Improving
Another factor halting the surge in scrap prices in our view, is an increase in domestic scrap supply on the back of increased automotive production and improving weather, which have improved flows of obsolete grades into scrapyards. Still, scrap inventories at the mills are low and capacity utilization has risen from 61% at the end of last month to 66% this week. We believe the continued domestic demand for scrap will provide price support.
Long Products May Hold Steady
We think that steelmakers will try to hold the line on rebar prices for March shipments after raising prices $125 in the past 2 months. Surcharges have become truly irrelevant to the beam market where nearly evaporated demand – and modestly rising imports – are calling the pricing shots these days.
Sheet and Plate Prices Likely to Rise
We believe that domestic sheet and plate prices could see further increases as demand is rising on stronger orders for automotive and appliances. However, rising inventories and mill restarts could put some downward pressure in the near term.