Scrap Update and Mill Announcement
On Friday Chicago shredded scrap posted the final for January at $420/ton, up $30/ton from December. This was on the higher side of expectation and follows a $20/ton bump the prior month. The reason for the bump was solid demand from the mills coupled with tight supply due to limited collections in the winter season. It is not that uncommon for scrap pricing to rally during the winter months. It is the size of the rallies and the durations that vary.
A leading mill wasted little time reacting to the scrap increase and announced Friday evening a $30/ton price increase nationwide on all new orders. It is expected that other mills will follow right away next week with versions of their own announcements. The increase will likely “stick” in many places and regions where inventory remains tight and buyers currently have low inventory and need product. However, this increase may also cause buyers to give pause and shop harder before “loading up for the season,” as pricing will again be very near historical highs, and at this time of season, much of the country is in winter. Buyers have time to wait a bit before the weather improves. A domestic move creates a better value proposition for import and likely will encourage additional supply. We will continue to keep you posted on how the market reacts to these latest changes.
