Ferrous scrap market participants expect that a doubling of US steel import tariffs later this week will add some stability to scrap prices in an otherwise lackluster and potentially softer June trade.
US president Donald Trump announced his intention to raise US steel import tariffs late last week to 50pc starting 4 June. His announcement propelled hot-rolled coil (HRC) futures higher today and has left scrap suppliers closely monitoring the steel market.
Physical flat-rolled steel prices have been slow to react, and major steelmaker Nucor held its weekly HRC spot price flat today compared to the prior week. Some market participants took the move as a signal that any near-term uplift for scrap might only be minor this month if any at all.
Buyers and sellers surveyed by Argus today anticipate ferrous scrap prices to be largely unchanged in the June trade but with some regional variations. In areas that are more heavily supplied, like Detroit and some sections of the Mississippi River, prices could decline by as much as $20/gt, while pricing other regions like the Ohio Valley and southeast should see support from stronger demand. Market participants said any major uplift to scrap prices may not be realized until later this summer.
Market sentiment leading into trade had been gradually softening through late May because of weaker steel demand, ample mill scrap inventories, a leveling out in export prices and steady import volumes of iron metallics in May.
HRC prices fell to $881/short ton (st) through May, down about $30/st from the prior month. Turkish bulk HMS 1/2 80:20 import price fell to $340.50/metric tonne (t) today, down $7/t from May highs but largely unchanged when the May trade began last month. Iron metallic imports remain robust despite the 10pc import tariffs. Estimated US import of bulk ferrous scrap, pig iron and direct reduced iron in May totaled 775,000t, up 25pc from April.
Some buyers indicated that they had eyed lower pricing, primarily for obsolete grades in regions where scrap supply appeared to be outweighing demand or where buying programs were limited. Several major US steelmakers issued end-month cancellations for undelivered May shipments, but fewer mills have canceled this month compared to May.
Suppliers reported at least 10pc declines in their monthly inbound scrap flows for obsolete grades, which most cited as a supporting factor to unchanged pricing in June. Suppliers attributed the drops inbound scrap flows because of lower scale prices. Domestic obsolete ferrous scrap prices fell by nearly $80/gross ton (gt) during the last two domestic trades and essentially wiped-out any positive ground obtained by suppliers this year.
Market participants are still waiting for an official announcement by the White House before fully digesting the full impact that the tariffs could have on the June scrap trade. Buyers and sellers have been plagued with the administrations chaotic roll-out of tariffs and ensuing delays or cancellations so far this year which have prolonged or drastically shifted the monthly ferrous scrap trade.
