The US scrap market was already preparing for a fall in January, but prices have decreased by more than expected amid weak domestic demand during January trading.

Trading activity in the US scrap market has remained unusually subdued, due to mills’ reduced purchasing plans. This, coupled with the oversupply of scrap, has caused prices to fall significantly from December values. Prices have dropped $50-60/gross ton in the US depending on the grade and region.

A US scrap supplier tells Kallanish: “This is really very unusual. Mills usually get rid of scrap inventories in December and re-stock in January. But this year, unusually, the flow was not impacted by winter conditions until January. This, combined with low demand in December, has resulted in an oversupply of scrap as we enter the new year. This, coupled with low scrap demand, lower pig iron prices, and the downward trend in sheet prices has led to a crash in scrap prices.”

Market participants are hoping February pricing will offset January’s sharp fall. However, the market is debating over how and to what extent this will happen.

On the US West Coast, a recovery was observed in US-origin containerised HMS 1&2 80:20 prices last week. Although offers still stand at $450/tonne cfr Taiwan levels, market players expect deals to conclude at $445/t cfr. Some US suppliers, targeting higher prices, are seen to have backed off from the market.

On the East Coast, there are US-origin offers at above $475/t cfr Turkey for HMS 1&2 80:20. The latest bookings to Turkey from the Baltic meanwhile appeared at $468-470/t cfr towards the end of last week.