US ferrous: Supply, demand weighs on May trade

US domestic ferrous scrap trading for May deliveries largely settled on Monday with primes, shred and cut grades mostly trading at down $75/gross ton (gt) for May deliveries, while machine shop turnings fell even further as mills shifted away from the grade to optimize efficiency.

An overhang of supply weighed on prices this month, although variations in buying programs across major mills ultimately resulted in regional variations in pricing for some grades.

An initial split in consumer bids delayed trading activity through the end of last week and resulted in a few regions diverging from the broader national trend of down $75/gross ton for cut grades this month.

Trading activity was prolonged in most regions until early this week after consumers firmly maintained varying bids for cut grades at down as much as $100/gt, which was met with varying levels of success with some large suppliers refusing to sell.

In more competitive regions though, consumers eventually mostly conceded at the national trend of $75/gt after it became more widely accepted through the week, while a few markets registered more unusual mill-by-mill split in pricing.

Meanwhile, machine shop turnings declined by steepest trend this month amid a combination of limited demand, adequate mill inventories and a shift in melt mixes.

Market participants noted that many mills have adjusted melt mixes to utilize cleaner grades of scrap to optimize melting efficiency and tap-to-tap times between heats.

Suppliers struggled to find outlets for machine shop turnings as a result with some northeastern mills not buying any volumes, while strong inventories across larger consumers throughout the south and Midwest left suppliers with few options.

As a result, some markets fell in excess of $100/gt delivered mill.

Detroit

Trading activity in Detroit remained partially underway late on Tuesday with some mills still battling on the monthly drop for 5ft P&S prices.

Detroit mills were initially split on bids last week with some down $100/gt on primes and cut grades, counter to a large national broker and a large integrated consumer who bid down $75/gt across the board.

Today one major-area Detroit mill adjusted its buying prices for #1 busheling from down $100/gt to $75/gt amid resistance. Pricing for the region is expected to be finalized tomorrow.

Midwest

Trading across the Midwest was nearly concluded on Monday with markets largely mirroring trends set across the country of down $75/gt on primes, cut grades and shred.

In Chicago, obsolete and prime grades traded down $75/gt from April levels, giving up increases on primes from a month earlier. This was the case despite smaller programs and a general overhang of cut grades, sources said. In particular, one local buyer of 5ft P&S held a smaller program, leaving suppliers looking for alternative consumers in multiple regions.

Local #1 busheling prices declined to $695/gt from $770/gt a month earlier. Prices for #1 HMS settled at $435/gt, a decline from $510/gt a month earlier, overcoming pressure for steeper declines from sales into mills in Cincinnati-Indianapolis. Argus also assessed the 5ft P&S price in Chicago at $470/gt, down by $75/gt over the same period.

In the Quad Cities, steel mills were content to match the Chicago trend of $75/gt declines across the board. Buying programs were somewhat weaker than usual, but with market participants resistant to breaking from other nearby regions, both obsoletes and primes followed at down $75/gt across the board.

Only machine shop turnings, similar to the wider northern US markets, declined in excess of $75/gt as supply outpaced demand and multiple mills roundly turned down offers for declines under $80-85/gt.

Philadelphia and Ohio Valley

Philadelphia largely followed trends from other regions with a down $75/gt across all grades except for machine shop turnings. Argus assessed local prices for #1 bundles and #1 busheling at $670/gt, down by $75/gt from April levels.

Prices for #1 HMS and P&S 5ft decreased by $75/gt to $440/gt and $450/gt, respectively. Shredded fell from $590/gt to $515/gt, while machine shop turnings fell $100/gt to $270/gt.

Pittsburgh and Cleveland/Youngstown also followed similar trends with primes, cut grades and shred down $75/gt delivered mill, while machine shop turnings registered steep drops amid an absence of local demand.

Argus assessed machine shop turning prices in both regions at $260/gt delivered mill, based on remote sales and local delivered equivalent.

South

The southern markets largely concluded trading today with pricing trends largely mirroring the down $75/gt.

An aggressive buying program by one large national broker at down $75/gt across the board largely set the pace for mills in the south this month.

Some southern consumers tried to buck the trend with mixed success for certain grades most notably heavy melting scrap, though some major suppliers refused to sell at any levels lower than down $75/gt which largely left the region following national trends.