US domestic ferrous trade in December is expected to firm up further by around $10/gt from the mid-November outlook of $20-40/gt gains to increases of $30-60/gt from November settled trade.
Some dealers believe December trades will start at $50/gt for shredded and trend upwards through the week reminiscent of the 2007 big run-up in prices. Most market participants, however, expect prices in the range of $40-60/gt in December’s early trading week with #1busheling leading the upward move and some variations depending on the region. Mills could meet the higher scrap prices due to increased finished steel prices and full order books.
Hot-rolled coil (HRC) list prices by US mills have increased through the last half of November. HRC list prices are now reported at $840-850/nt ($926-937/mt) per the latest $50-55/mt increase. Effective transactions are estimated in the market at $50-100/mt lower than the list price depending on volumes, but deal prices have increased by about $20/mt since mid-month and will firm up in December as a result of the latest price push.
HRC has increased by about $130/mt in the past month and almost $400/mt since early August. Pricing for this product could trend above $850/nt ($937/mt) into January given the restocking momentum that began in September but will subside in late January as new flat mill capacity comes online. The restocking cycle was initially expected to halt prices in November but improved consumer end-demand and longer lead times, has extended that expectation by two months.
The weekly Davis Index for US basic pig iron import prices increased on Nov 25 by $36/mt to $430/mt cfr New Orleans. This surge, which came as a surprise, was followed by another round of flowing prices. Late in the week another basic pig iron deal closed from the CIS to the US priced just over $450/mt cfr Nola for March shipment as most producers said they have sold out through February. BPI has increased by $75/mt in the past months with the grade transacting near $375/mt cfr Nola on Oct 29.
Export prices and demand remain strong on both coasts. The daily HMS 1&2 (80:20) Turkish imports index increased by almost $5/mt on Monday to $357.50/mt cfr, up $25.32/mt from $332.18/mt cfr on Nov 19. Scrap demand via container has also encountered an upward trend with the weekly New York containerized Davis Index climbing from $323/mt fas for shredded on Nov 19 to $328/mt fas on Nov 24, up $5/mt.
Some scrap dealers project an increase of about $100/gt over the next two months on strong domestic demand, continued exports, and limited scrap inflows and inventories. Finished steel sales will continue with long 9-10 week lead times on increased consumer demand and limited import options.