by Kevin Torres, VP, Recycling & Scrap Procurement, Bayou Steel Group
- Most mills are ‘steady’ but uneven across the product lines IE. Flat products stronger, long products more tentative/mixed;
- Continued improvements in energy, non-residential and automotive still strong;
- Import pressure seems to be easing with actions, threats thereof, pricing;
- Potential infrastructure spending increases look more promising than in any recent times;
- Scrap volatility seems to be moderating after some movement earlier in the year; and
- Increased capacity utilization is unknown? Running 73-74 percent, up slightly so far from recent run rates in the low 70’s.
Pro-Business Environment And Infrastructure Spending Will Certainly Help When Tangible Results Are Realized.
The ‘Trump’ effect is a large part of the economic optimism. The keys to the improved scrap markets and recent stability in pricing has been due in large part from the demand side of the equation. Demand in most sectors has been stable. The supply or perceived supply in some cases has been more of the reason for the limited volatility we’ve seen. This tends to even out month after month. Seasonal factors were less of an issue than in recent times. The winter was relatively mild which helped to keep scrap flowing. Somewhat higher scrap pricing also helped bring out more obsolete scrap and improved the amount of demolition activity we have been seeing. Couple this with no real surprises in the export demand this year and I think we are experiencing a relatively balanced scrap market so far this year.
There are certainly many other factors shaping the scrap markets but for the most part the fundamentals are in place for better times ahead. Compared to recent years I think most would agree that the current outlook is possibly the best we have seen in close to 10 years.
Let’s hope this continues.