Scrap steel prices are split in June depending on which side of the country you are on and, unfortunately for all of us, we are on the losing end. Scrap prices are down $20 ton here in the Western US while in the Midwest and East Coast, scrap prices declined only $10 ton. In some rare cases, prices on prime grades of scrap have remained sideways for the June buy. This continued price decline is due to an overabundance of scrap out west due largely to the absence of export buys that typically consume a large portion of available scrap tons. This lack of export business continues to flood domestic mills with an oversupply of scrap fueling the current downward trend. The East Coast and Midwest markets seem to be a bit more balanced with more consuming mills to spread out the available scrap tons.
It is normal once or twice a year to have the scrap market flooded with an abundance of scrap causing a temporary “Mills Market” or a time where the domestic mills have sufficient supply coupled with little or no export pressure and lackluster future sales. This gives them the ability to dictate market pricing and limit tonnage bought throughout the surrounding areas. Historically this only lasts 1-2 months and allows the mills time to catch up with the new steel demand and increase their margins. Once supply and demand reach an equilibrium, prices begin to increase once again and the healthy competitive nature between the scrap provider and Mills exists. June marks the third straight month of market weakness and its believed that we are nearing the bottom of the destabilized market. Scrap supply and new steel demand are beginning to equalize but exports are still very quiet. The lack of export pressures is causing many of us to wonder if we will linger at these lower prices for long or will we begin to see stronger scrap prices in July-September. The scrap markets need an injection of activity from either stronger domestic new steel sales or the resurgence of export buyers to jump start the anemic conditions currently existing in the markets.
Base metal prices remained relatively flat through May, especially compared to the volatile levels we have seen in previous months. Over the past 30 days, copper has fluctuated up and down in a 10-15 cent range however is only up about 3 cents over the past 30 days. Aluminum too has fluctuated heavy at times and gained about 2 cents in May, Nickel prices are down about 5 cents over the same period. The only notable price weakness to point out in the future is stainless steel. It is forecast to be much weaker in June through the third quarter with new price contracts already 7-9 cents weaker than May levels. Like Steel, there is an overabundance of stainless scrap in the markets and very weak future sales.