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Will June be as good as it gets for 2015 pricing?

By Bill Beck - August 24, 2015

After scrap prices dropped another $25 to $30 in August, one Midwest broker said he thought the prices paid for ferrous scrap on July 4th – which still reflected June pricing levels – would be the high for the remainder of the year.



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

5

Prices have not risen across the board in a September market in five years, since 2010. Still, prices have dropped across the board in only three of the past 10 Septembers, meaning they were mostly up or sideways in the other years. Most of those changes were small, although 2008 experienced a large decrease as the financial markets collapsed.

47

The Scrap Trends Outlook indicator number for mill demand points to a slight decrease in the need for scrap in September. This is based on two major factors: Although mills are coming out of summer slowdowns and shutdowns, the steel capacity utilization rate is holding steady; and labor and end-user volatility could still affect production and orders.

82

The percentage of respondents in this month’s survey who expect scrap prices to rise or, at worst, be sideways next month. Prime and cut grades lead the way in expected market gains, with frag grades following closely behind. Foundry grades are expected to be sideways. Overall, about 58 percent see a sideways movement coming.

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

Prime Grades

September Review
September Review
September outlook:
Bullish (37.1)
September's actual change:
Busheling: -$25/9% 
Bundles: -$25/10% 

Cut Grades

September Review
September Review
September outlook:
Bullish (31.6)
September's actual change:
No. 1 HM: -$31/13% 
P&S: -$28/11% 

Frag Grades

September Review
September Review
September outlook:
Bullish (30.5)
September's actual change:
Shred: -$32/12% 
 

Foundry Grades

September Review
September Review
September outlook:
Bullish (32.1)
September's actual change:
Punchings: -$20/4% 
Misc. Foundry: -$23/6% 

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.
Many inventories are low at dealer and broker yards, which could drive prices up if mills seek material
2.
Raw steel capacity utilization rates remain anemic
3.
Alternative irons prices, supplies could still drop
4.
Export demand is not expected to strengthen much
5.
Historical factors suggest prices could increase A potential drop of overall mill demand could mean a sideways or even weaker month in September
6.
A further slight price slide took place in mid-July, a potential sign of lower values heading into August
7.
Shredded scrap may no longer be in oversupply
8.
Local inventories could tail off significantly
9.
Some mill order books are weaker as some sectors flag
10.
Summer heat is fading, as is the flow of scrap

Notable Quotes about Next Month

" Obsolete scrap will slow to a trickle at these price levels. However, availability of traditional export materials, ore-based metallics, and prompt industrial scrap will result in adequate supply."
" The scrap markets are experiencing the full force of the downward pressure on global commodity pricing."
" Waiting on fundamentals to become clear on China’s economy."
" Two major mills’ labor contracts are expiring. If they strike, 150,000 tons (are) not being purchased."
" Much lower supply of materials available."
" Prices usually always rise for September."