A Look at Midwest Scrap Pricing for September

Scrap prices surprised scrap dealers and have deteriorated more than what was expected going into September negotiations with the domestic steel mills. Here is how one of the national scrap companies portrayed the tone of the negotiations:

“As you can imagine, it’s been a hectic time since the return from the holiday last week.  As you’re aware, scrap prices deteriorated further than anticipated for September.  Mill demand was weaker than expected as order books continued to contract.  This left mills with greater raw materials inventories than planned, thus limiting buys for September.  Interestingly, despite another downturn in scrap pricing, flows have remained fairly steady as market participants see the steel price declines putting additional downward pressure on scrap prices heading into October.  However, we’ll likely see the traditional seasonal trends coupled with reasonable export demand potentially balancing supply/demand beyond October, leaving scrap somewhat range-bound through year-end barring any significant recovery in mill operating rates.  Looks a lot like the Q4 scenarios we’ve seen during the past few years.”