 |
| US prime steel scrap |
Contract Renegotiations Reflect Market Reality
US prime steel scrap contracts are undergoing major renegotiations as mills seek lower prices. Market participants aim to rein in premiums, previously inflated due to shortage fears. Meanwhile, Canadian yards hold over 500,000 tons of available prime scrap. As a result, mills are avoiding overcommitment and prioritizing profitable purchasing over volume control.
Price Trends and Premium Adjustments
The value of prime scrap has nearly halved from prior peaks, with No1 busheling at $390 per gross ton in October, down from $760 in April 2022. In contrast, past long-term contracts with high AMM premiums are being reviewed. Consequently, mills now leverage cheaper spot market options, reducing reliance on locked-in agreements. Market psychology shifted from scarcity fears to strategic cost control.
Strategic Shifts and Sustainable Pricing
Mills and scrap companies adjust industrial contracts to reflect sustainable pricing. Overpaid premium structures are being corrected, and “orphaned” accounts may emerge if terms are unfavorable. In addition, competition has created inefficiencies that now resolve through renegotiation. Therefore, 2025 contract settlements will likely establish transparent, profit-oriented pricing.
ScrapInsight Commentary
US prime steel scrap contracts are correcting after a period of overpricing driven by perceived shortages. Mills now leverage spot market options, supporting sustainable pricing. Premium adjustments in 2025 will enhance profitability and stabilize industrial scrap supply chains.
