Final Thoughts

With the expectation of higher scrap prices coming for the month of June, on top of the steep rise in ferrous scrap this month, the mills’ margins may well be squeezed, which will impact negotiations and pricing over the next few weeks. Most steel buyers anticipate a new round of price increases by late May into the beginning of June.

At the same time, automotive production is restarting and the price of oil is closing in on $30 per barrel. Automotive may well be back to full production by late June, while oil needs to exceed $40 per barrel before we see it having an impact on oil rigs and production in the U.S. Dr. Chris Kuehl was pretty optimistic last week when he called for oil to get back to $100 per barrel in the not too distant future (due to Americans doing USA-based vacations in their cars and getting back to going out to eat, stores, etc.).