Ferrous Scrap Prices Likely to Decline in February

Following big jumps in December and January, ferrous scrap prices are expected to moderate in February. Steel Market Update sources predict obsolete grades could drop by $30-50/GT and prime grades by $10-20/GT due primarily to the large amount of scrap offered to the mills in January and the weakening export market.

“Scrap dealers are lowering their scale prices and the scrap food chain is rushing to ship as much as possible at the January levels,” said a dealer in the Northeast. “As in many previous scrap markets, the pricing pendulum is swinging further than it should—too far up in January and too far down in February. Macro business conditions are not nearly as volatile as the scrap price swings suggest. Domestic demand for scrap continues to grow and a drop in excess of $40-50/GT will result in much lower inbound flows and dealers reducing their tonnage offers. This ultimately will result in a rebound later in the month or into March, which historically is quite common,” he added.