METALLICS Mills expect a mostly flat steel market and tamer scrap prices

Sep 01, 2007 | 10:53 AM |

While volatility seemingly goes hand in hand with ferrous scrap pricing, movement in the near future, at least, looks likely to be in a narrow range. The calming of ferrous scrap's waters is expected to hold for much of the remainder of the year as demand mirrors that in the steel business.

Early predictions that steel prices could rise to record levels by midyear sent service centers scurrying into the market to scoop up all the steel they could buy. Unfortunately, with neither automakers, nor homebuilders, nor appliance makers in much of a buying mood, that created an oversupply at service centers and brought buying to a virtual standstill. By the second quarter it was pretty clear that the flat-rolled steel business, the biggest segment of the domestic steel market, was tanking, executives at several domestic steel mills said.

"The softness is more centered on the flat-rolled business; bar products remain pretty firm," a purchasing executive at one Midwest mill said. And so goes ferrous scrap.

He's not alone in his view among steel executives who see little or no change in the ferrous scrap market during the second half.

William B. Larson, senior vice president and chief financial officer of Commercial Metals Co. (CMC), said the big Dallas-based steelmaker and scrap processor sees the ferrous scrap market "drifting," with little or no sense of direction. "As far as the next few months are concerned, we think it will just drift. There have not been any catalysts that will propel it up or down."....