February Scrap Pricing Now Poised to Drop $20-$40

SMU scrap sources are all telling us that the recent transactions with Turkey have “surprised” dealers, the net result may well be a much weaker domestic scrap market than anticipated as we move into February negotiations next week. A weaker scrap market, especially if it were to drop $35-$40 per gross ton would dampen price negotiations between buyers and the steel mills.

At the beginning of January most dealers expected February scrap pricing to be relatively stable. Then, over the past week the word started to leak out of an export deal done down $20. The expectations of a down February have started to sink in with one scrap dealer telling me, “…Prices will drop in Feb and now, due to the recent export sales, prices will fall more than the expected $15-20gt to more like down $30-35gt. Strong domestic demand and limited supply (most dealers have cleared the decks in Jan) should limit the drop.”