[ferro-alloys.com]Steel mills throughout the US issued cancellation notices this week for undelivered August scrap, effective at the close of business Friday, as they prepared to buy lower next week following the US Labor Day holiday.

The cancellation notices came as no surprise to scrap suppliers who have been bracing for a September scrap fall.

"Cancellations are going out today," one mill buyer said Friday. "Down $20 is in the bag and it could be more, we'll see. I don't see dealers holding tons."

With the downward trajectory of September assured, questions loom now over the size of the fall on shredded scrap, to what extent prime grades follow and whether or not a recent uptick in East Coast bulk export prices could see slightly firmer pricing in coastal regions.

"Look for the Midwest and South Central to probably be down $30/lt on shred and cuts and down $20 on prime," one scrap supplier said. "The coast could hold up better on an export floor, but no guarantees."

After HMS 80:20 prices fell from $328/mt to $300/mt CFR Turkey in mid-August, prices staged a late month rally following the latest US East Coast bulk sale to Turkey was concluded at $315/mt on Wednesday.

"I saw the export price to Turkey go back up, that's good. I think hopefully that'll prevent it from going down too far," said another supplier who believed shred would fall $20-$25/lt while primes could stay sideways. "There's just not a lot [of prime scrap] out there. Everyone's melting [primes] as fast as they can. If I call guys and tell them I'll sell the primes sideways and they want down $10, I guarantee they'll hang up -- call me back and say let's do prime sideways."

The supplier noted that only 19 working days in September plus planned mill outages have reduced mill's September scrap requirements.

"I think that down $30 is going to be met with significant resistance from dealers," one Southeast scrap supplier said. "If down $30 or more is pushed through, flows will drop dramatically. At down $20, business gets done timely and flows will continue to slow but at slower, small pace."

The S&P Global Platts Midwest shredded scrap assessment fell $19.75/lt Friday to $331.50/lt delivered mill.

"I think the mills will try and buy shred at down $40 on Tuesday," another supplier said. "It's time to see who says no."

Another source believed the late export rally could help stave off a pricing collapse.

"Nothing has changed about September other than a floor on export has helped what could have been a free fall down $40 market on shred," the broker said. "There is still way too much shred in the market. Scrap inventories are high so to get to an actual bottom, we need to clear some scrap."

Some dealers were miffed at the suggestion of a potential scrap pricing correction, considering finished steel prices have mill margins at their highest level this decade. They believe a bottom is near but also concede there is not enough visibility in the current market to speculate and hold back tons in September.

"It's pretty clear to me that mills see September as a buying opportunity," another supplier said.

Another broker said he was seeing "too much uncertainty at the moment and too much risk to hold tons if this isn't the bottom."

• [Editor:王可]