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One step forward, two steps back for market

By Bill Beck - July 27, 2015

Back just a month or so ago, July was going to be a turnaround month for the ferrous scrap trade. June had seen the ferrous scrap market rising like a Phoenix from the ashes, and many in the business felt that July would witness a further recovery from the relentless bear market that had ravaged ferrous scrap since late winter.



Industry Survey of Factors Affecting the Upcoming Market

Imagine having advanced notice of what your allies, competitors, peers and clients are thinking about what's to come in each new monthly scrap market. Scrap Trends Outlook, delivers an exclusive look at where prices, supplies, demand and other factors may be heading. Each month, Scrap Trends Outlook gives you a chance to listen in on the emerging industry conversation about the upcoming scrap market and provides a comprehensive tool for buyers and sellers to gaze into an industry consensus of where the price and availability of scrap may be heading.

Numbers and Letters

A quick look at key points expected to affect next month's markets

7

During the past decade, scrap prices have risen across the board or been partly sideways seven times in
August markets, and have fallen across the board only three times. The last time prices dropped across the board was in 2011, but even then the declines were only a few dollars per ton. Prices did fall considerably twice – in 2006 and 2008 – however.

43

The Scrap Trends Outlook average indicator numbers for mill factors in August. Mill production is expected to fall next month, along with mill orders, service center orders and mill demand for scrap, while mill inventories, home and captive scrap and slowdowns/shutdowns are expected to hold fairly close to the levels experienced in July.

95

The percentage of respondents in this month’s survey who expect scrap prices to fall or, at worst, be sideways in August. Frag and cut grades far and away lead the pack in expected market weakness, with foundry, prime grades following with a slightly less drop. Overall, about one-fourth see sideways movement, while 71 percent expect a decrease.

Our Methodology

Scrap Trends Outlook Methodology: A numerical value is given to the overall trend for the upcoming month after all the survey results of a series of 15 indexes are calculated based on a weighted average. A number close to 50 will give a ‘sideways’ or ‘unchanged’ reading, while numbers above 50 will give a reading for a bullish trend. The closer to 100, the more likely it is that prices will trend upward. Conversely, a number below 50 will give a reading for a bearish trend. The closer to 0, the more likely it is that prices will trend downward. N/A means there were too few survey responses to publish a reliable figure.

Taking Account

A look at how Scrap Trends Outlook Index numbers for July stacked up against actual changes in last month's market.

Prime Grades

July Review
July Review
July outlook:
Bullish (63.2)
July's actual change:
Busheling: -$5/2% 
Bundles: -$5/2% 

Cut Grades

July Review
July Review
July outlook:
Bullish (60.1)
July's actual change:
No. 1 HM: -$12/5% 
P&S: -$11/4% 

Frag Grades

July Review
July Review
July outlook:
Bullish (60.5)
July's actual change:
Shred: -$5/2% 
  

Foundry Grades

July Review
July Review
July outlook:
Bullish (58.7)
July's actual change:
Punchings: -$8/2% 
Misc. Foundry: -$3/1% 

10 Things to Watch

Never miss what's going to happen in next month's ferrous scrap market again

Sign-up for the new free alert, 'Ten things to watch'  and we'll tell you what we're keeping an eye on for next month's ferrous scrap markets

 

1.
Export demand is expected to be weaker, especially from Turkey, but also with a downward push from Asia
2.
Economic concerns still haunt the U.S. economy
3.
Supply outweighs demand in most regions
4.
Greece, Asian markets are controlling global outlook
5.
Historically, August is a sideways-to-strong market
6.
A further slight price slide took place in mid-July, a potential sign of lower values heading into August
7.
Local inventories may begin to fall, the impact unknown
8.
Rising freight costs harm exports, domestic shipments
9.
Finished steel goods sales still face some open questions
10.
Feeder yards may slow down creating some shortages

Notable Quotes about Next Month

" Pricing and demand depend upon buys from overseas, especially Turkey. Domestic demand won’t impact much."
" Low export demand and power curtailments will drive prices lower."
" Limited mill buying."
" Further cutbacks by mills and an abundance of raw material being offered to them."
" Certainly an unexpected collapse of the export market."
" Overall soft global demand."