As primary metals prices slip, scrap prices soften

On the finished steel side, the early guess for this month’s spot Midwest hot-rolled sheet in coil (HRC) is in the $970 to $1,020/net ton range, but with little buying reported, especially with reports circulating of October HRC offers by smaller mills at $960, published reports put the Midwest spot market at $1,000 to $1,020/ton. Spot market prices for hot-rolled sheet were as high as $1,060/ ton in mid-August.

Michelle Applebaum Research in Chicago expects to see sheet prices to fall to the $850 - $900 level by November. And what we’re seeing in the U.S. is being played out internationally as well; global producers are said to be “discounting heavily” looking for a trough point.

GFMS Ltd. of London is one analyst which recently noted that, so far, there’s little sign of a major comeback in Chinese steel demand, while in Europe, industrial demand is also slowing. “U.S. mills,” the GFMS analysis continues, “will have to start cutting back output shortly-– or at least announce a cutback-– in order to stem further price declines.”

With tepid mill demand a lack of export orders, domestic ferrous scrap prices are also weaker all around. Published reports are noting some pretty wide price ranges with some prime industrial steel scrap grades lower by more than $300/gross ton, along with No. 1 dealer bundles that are believed to be down by as much as $350 a ton to around $510 in the Chicago market. Shredded scrap prices, meanwhile, range from $380 to $400, delivered, northern industrial cities, while No.1 heavy melt has reportedly slipped to about $300 on average. The Iron Age No.1 HMS (heavy melting scrap) composite price is $297.50/ton, the first sub-$300 posting this year.

Turning to scrap exports, we understand that Turkish mills bought four cargoes of ferrous scrap in the past week. Reports placed an 80-20 mix of No.1 and No. 2 HMS at $420/metric ton, delivered, a similar cargo was placed at $410 and shredded scrap figured at $425. Ocean freight rates have declined to about $50/metric ton from U.S. East Coast. For scrap delivered to the dock, that last buying price we heard for No.1 HMS was ranging between $270 and $300/gross ton.

Meanwhile, in nonferrous metals, it’s all quiet on the scrap front these days, so our latest nonferrous scrap price indications are being offered with less confidence than usual. The incentive among the consumers, it seems, is to “sit on their hands” with the expectation that tomorrow’s price will be lower.

Secondary aluminum smelters are definitely feeling the lack of die-caster demand from the automotive sector; no surprise there and that’s reflected in their 380 alloy going out the door: volumes are lower, with many selling partial loads and $1.15/lb delivered as the high-end price.

Aluminum scrap earmarked for the smelters, assuming that there is serious buying, is being quoted in the low 70¢ cents for old sheet and cast delivered, Midwest; figure the range at 72–74¢; painted siding below 80¢ and MLCs (mixed low copper, aluminum clipping and solids) at 81–82¢, at best.