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Fresh April prices for shredded scrap (obsolete) declined $10/ton (or 2.3%) to $430/ton, while #1 busheling (prime) scrap fell another $15/ton (or 3.2%) to $448/ton, according to American Metal Market.

The $10/ton drop for shredded was at the high of our expectations, while the $15/ton decline for prime scrap was greater than forecast.

We believe that obsolete scrap flows have been much more liquid early this year when compared to the historical norm because of warmer weather which continued to pressure prices despite strong overseas demand from Turkey.

We believe the larger-than-expected drop for prime is a function of increased supply as strengthening manufacturing activity – most notably automotive – is leading to more prime scrap generation and we suspect that prime scrap and pig iron imports ordered earlier in the year are adding further to the enlarged scrap reservoir.

Our full report provides our scrap and steel price outlook as well as the implications for steel equities.

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