The scrap market has been quite the wild west lately and it looks to continue this huge swings through the next few months. From what I’ve heard domestically and overseas there is a lot of uncertainty in the market still regarding how smoothly the reopening of businesses will be even with the ramp up in vaccinations. The market has been on a pretty steady ride to this point getting prices to a high point we haven’t seen in quite some time. A lot of the tightness in the supply for scrap was taken up pretty quickly when prices jumped to these heights causing a “flooding” of scrap at mills in the South and overseas. This causes the mills to think there is more scrap that can still be bought at even lower prices. The mills and the scrap dealers both get weary of each others positions causing a disconnect over the amount of physical scrap actually available.
The article from Recycling Today states that there are mill processors that believe we will continue to see the $50 GT swings through Qtr 2 this year. These swings make it hard to price material from month to month as it becomes almost a guessing game of when to buy and sell. The Comex copper market we saw reach $4.30/lb earlier this month has retreated to the $4.00/lb. range. The LME aluminum market also saw a run up to over $1.02/lb. now come back down $0.05/lb. It’s like the stock market everyday with traders trying to find the next opportunity to make a few dollars here and there.
From what I have heard from clients these last few weeks is that there are a lot of scrap companies quoting incredibly high prices. Pricing that is almost unreasonable and impossible to keep at those levels without some sort of deception game being played. All I can ask of you is to check with me when getting quotes for any material. With the swings in pricing it can change the price for material greatly from day to day.
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US ferrous scrap mart mixed on April outlook
http://www.amm.com:8080/Article/3978873/Scrap/US-ferrous-scrap-mart-mixed-on-April-outlook.html
An overhang of obsolete material at the end of negotiations in the March ferrous scrap trade in the United States has sellers mixed over what is in store for April.
While mills are still chasing and open to buying prime material for the March order books, secondary grades - including No1 heavy melt and shredded scrap - are only able to find homes if sellers are willing to sell below market value.
“‘No, thank you’ prices from the mills are looming,” a seller into the Ohio Valley and Southeast said, referring to price offers the mills issue that they expect will be rejected. “I expect mid-month downward adjustments are coming for shredder feed. The first sale was the best sale; and at these prices, scrap is coming out of the woodwork. At the same time, busheling could get even tighter.”
The trade, which basically closed in 24 hours, was quick a one because there was so much scrap available and sellers were eager to capitalize on the higher prices.
“There is so much scrap out there that mills were covered in a matter of minutes and mills began ghosting the little guys. April will be down due to sheer volume of scrap. Supply is not going to be any worse in April than in March. It will be better because spring will be here” a seller into Chicago said.
But other sellers were not convinced that April will see a price retreat.
“Mills will be even busier and bought conservative this month,” a seller into the Indiana market said.
According to a seller into the Detroit market, “a lot of paper is flying around in the spring breeze, and a lot of paper was sold at these prices.”
The practice of selling paper - which occurs in up markets - refers to dealers selling more scrap than they have in their possession and then trying to chase additional tons to fill their orders.
A seller of busheling into Detroit said he was confident for April as well.
"March weather can be devastating with rain and snow, so I am not bearish,” that seller said.
Meanwhile, the St Louis and Arkansas-Tennessee markets were negatively hit by the storms in Texas last month.
“It is kind of a lousy situation. We had pretty good tonnages booked for February, then saw the bitter cold spell shut down our flow. We owe a lot of scrap from February orders and cannot raise our prices to follow March increases until we fill the cheaper orders,” a St Louis seller said.
“These whipsaws are ridiculous. They should have held steady for February instead of pushing the price down, because now they are right back where they started,” the St Louis seller added.
While the jury is still out on where secondary scrap will be headed for April, prime is expected to remain tight through September because automotive production has stalled due to the lack of semiconductor chips.
Chinese chip companies have been overwhelmed making chips to supply laptops for students being homeschooled and a workforce that has moved remote due to the Covid-19 pandemic, according to a seller into the Indiana market. The chip companies will continue to focus on filling backlogs for their computer company businesses, which are a larger client than the automotive industry.
The seller into the Indiana market said that automakers account for only 12% of the chipmakers' overall clientele, so will remain a lesser priority. He does not expect the tight prime market to recover until September.
