As May trading approaches, pressure on US domestic scrap prices continues to build, fuelled by peaked finished steel prices, the collapse of export markets in April, and seasonally increasing scrap inflows.
With the US economy reacting to new tariffs, the outlook for the steel market is becoming increasingly uncertain. Coupled with the approaching summer slowdown, there is little sentiment or fundamental support for growth in the hot rolled coil market, intensifying the pressure on scrap prices that have already been hit hard by the export collapse.
A US supplier tells Kallanish: “Amid abundant shredder inbound flow, there is strong pressure on shredded prices. However, on the busheling front, although falling shred sentiment will inevitably weigh on May pricing, the relatively steady Brazilian pig iron market and the production reductions in the US auto industry during April – responding to tariff-related uncertainties – could limit the downside.”
Meanwhile, on the export side, amid the continued absence of Mexican demand, sentiment is yet to pick up. This is despite recent signs of price stabilisation in Türkiye.
Taking all factors into account, market consensus points to a likely $20-50/gross ton decline from April values in May, with greater downward pressure expected in the Southern US market, where supply remains abundant. Ohio Valley demand is expected to be relatively stronger compared to other regions.
In the Southeast market, expectations are for prices to drop by $20/gt for busheling, $30-40/gt for cut grades, and $40-50/gt for shredded scrap from April.
For West Coast business, US-origin containerised HMS 1&2 80:20 offers continue to decline, reaching $290-295/t cfr Taiwan, their lowest this year. Meanwhile, Taiwan domestic mill Feng Hsin has kept both its rebar and scrap prices stable as of Monday, while another, smaller mill announced a scrap price cut starting Tuesday.
On the East Coast, the latest deal towards the end of last week was concluded at $325/t cfr Türkiye for HMS 1&2 80:20 last week. The seller, having initially sought $330/t cfr, was unable to secure a buyer at that level.
Having largely completed their May-shipment requirements, Turkish mills are now focusing on steel sales before moving on to June-shipment purchases. Scrap suppliers, considering Türkiye’s remaining requirement for June-shipment cargoes, are pushing for higher prices in the Turkish market. Buyers, unwilling to pay higher values for scrap unless they see a remarkable rebound in steel sales and prices, are however not rushing to place orders.
On Monday, rebar prices in Türkiye remained stuck at $530-550/t ex-works, pressured by sluggish demand and showing no signs of recovery. Although almost all market participants agree valued have bottomed, most question the sustainability of any possible uptick in the near term under the current circumstances.
Source:Kallanish