Steel duality puts pinch on ferrous scrap prices

Nov 08, 2006 | 01:22 PM | Michael Marley

Two opposing forces—a weakening domestic steel market and strong offshore demand—are pulling ferrous scrap and the prices paid for the metal in opposite directions this month.

Offers for such industrial grades as No. 1 bundles and No. 1 busheling are down as much as $30 a long ton, while the prices for normally less desirable scrap like No. 1 heavy melt and shredded are off by only $5 to $10 a ton in the inland markets and unchanged to higher in cities and towns closer to the East Coast.

Domestic demand for autos is weaker and, thus, demand for sheet steel products has declined. At the same time, imports of finished steel products have risen and inventories both at the mills and service centers are higher.

One scrap buyer at a flat-rolled mill in the Midwest said the order books at his mill and many others in the region are "not in real good shape." He cited one industry analyst's prediction that sheet steel production must fall by as much as 2.6 million tons this quarter if supply is to match demand.....