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Sentiment turns bearish for July US ferrous scrap buys

https://www.chemnet.com   Jul 07,2015 Platts
Ferrous scrap pricing expectations grew more bearish on Monday as mills were emboldened by a lower-priced US bulk scrap sale last week and poor market fundamentals.

Multiple mills had canceled uncompleted June scrap orders by the end of last week, expecting lower prices to become available during July negotiations this week, while not all dealers were ready to concede downward pricing.

One Northeast mill came out late Friday with firm offers of down $20/lt for July scrap needs.

"Smart, because exports have fallen -- that and more," one trader said of the mill's offer price.

Dockside pricing has fallen to below $200/lt HMS I basis for local dealers after a US merchant sold a bulk scrap cargo to a Turkish mill last week at a price $33/mt below the prior US East Coast bulk sale the week of May 11.

One scrap dealer agreed that export was not providing any pricing support, but he noted that most East Coast shippers are sold out through August and early September.

"That should at least stop scrap volumes from flowing west," he said. "Demand still seems firm in the South/Southeast and river [markets], while supply is a little better than June but not much.

"There is no doubt about negative sentiment taking hold of the market. Export aside, I still believe sideways pricing should be the market on the river and South/Southeast. We'll see how much resolve dealers have today and tomorrow."

Some mill buyers indicated they would formally enter the market late Monday or Tuesday.

"I agree that no export is hurting," another dealer said. "But those mills not near the coast will find scrap flows poor. So [the] market going down will kill flow and put them in a bad spot for August."

One major scrap broker was heard giving indications of a down $20/lt pricing move this week, but sources noted that was from higher-priced sales in June.

"I think we will shake out sideways for July, buy our melt and come back in August in a position to push down a bit," one mill buyer said. "I think we could push shred down $10 [this month] and buy but then risk not being in a position to push back in August."

Platts maintained its Midwest shredded scrap assessment on Monday at $280-$285/lt delivered mill.
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