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Autumn leaves much to be desired for scrap prices

By John Ambrosia - September 28, 2015

Sellers and buyers heading into October’s scrap market say there are several key reasons why they expect prices to fall.

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


Prices have not risen in an October market even once during the past decade. The last times prices rose from September to October was in 2004. In fact, the only time a price even moved sideways since then was No. 1 heavy melting two years ago. Although October decreases are occasionally small, declines tend to hit the double digits every year.


The Scrap Trends Outlook indicator number on average for mill, broker and export demand next month points to a decrease in the need for scrap. This is based on several major factors: The domestic steel capacity utilization rate is holding steady; export demand is waning; mill orders are in doubt; and service centers are not being aggressive.


The percentage of respondents in this month’s survey who expect prices to fall. An additional 33 percent say prices could be sideways or soft sideways next month. Prime and cut grades lead the way in expected market declines, with foundry grades following closely behind. That leaves only 9 percent of respondents looking for an increase.

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 September stacked up against actual changes in last month's market.

Prime Grades

October Review
October Review
October outlook:
Bullish (53.0)
October's actual change:
Busheling: -$8/3% 
Bundles: -$8/4% 

Cut Grades

October Review
October Review
October outlook:
Bullish (52.8)
October's actual change:
No. 1 HM: -$12/6% 
P&S: -$10/4% 

Frag Grades

October Review
October Review
October outlook:
Bullish (52.2)
October's actual change:
Shred: -$11/5% 

Foundry Grades

October Review
October Review
October outlook:
Sideways (50.0)
October's actual change:
Punchings: -$10/2% 
Misc. Foundry: -$10/3% 

10 Things to Watch

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Seasonal issues tend to make fall markets more likely to decline, due to holidays and inventory accounting
Raw steel capacity utilization rates are stagnant again
The supply of scrap is sufficient to meet needs
Export demand is weaker from Turkey and China
Service centers are behaving cautiously in the market
Feeder yards may slow down in the colder weather, creating some shortages of shredded scrap
Weather could begin to deteriorate
Finished steel goods sales are down
History strongly suggests October prices may decrease
The strong U.S. dollar is hurting all aspects of business

Notable Quotes about Next Month

" It depends on the accuracy of export reports; some say export tonnage is down and scrap is flowing inbound, other reports say that large tonnages have been sold to exporters."
" The domestic ferrous scrap markets continue to soften as export prices decline. Collections rates are steady despite prices dropping. Operating rates contributing to uncertainty."
" Mill demand remains sluggish while scrap and metallics supplies are plentiful."
" Everything is quiet – sales and production; everyone is reducing inventory."
" Lower exports, mill maintenance, steel service centers’ large inventories."
" Scrap dealers will have too much supply."
" Domestic scrap prices could potentially benefit from a decrease in steel imports as domestic operating rates improve. However, increases may be muted from increases in supply of imported scrap, ore-based metallics and semi-finished steel products."
" I think the domestic steel industry will work very hard to do things to create a higher-priced market."
" Scrap price will go up after it bottoms in a few months."
" Sales forecast still looks flat."