DRI outage pushing scrap?

We’re hearing from some steel traders that salespeople from some mills, especially some directly affected, are saying the DRI outage at Nucor’s Louisiana site could force them to step up scrap purchases by about 500-600k tons.   That seems a bit high to us, and depending whether the DRI usage is 30% of melt or 10% of melt, we’d say that number sounds like about 2-6 months of replacement, allowing for a fairly significant outage.

Steel salesmen are pushing prices saying that scrap prices will rise and push HRC to the mid-$600s.  We’d say possible but not likely sustainable given the slow demand trends here and the premiums that would then come into place versus current foreign pricing.  With US HRC at $600 now, and maybe bouncing $580 on the low side, there isn’t much incentive for foreign steel to make its way here and thus, we’d say not much downside risk to pricing from import supply growth.  That could change with a sharp spike, so while the upside may be pleasant beware the reaction from global supply.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s