The quality and quantity of the heavy melting scrap is deteriorating as rebar and exports enter the stream

Jul 01, 2010 | 09:48 AM | Michael Marley

Change is inevitable, but perhaps nowhere is this more keenly evident than in the ever-evolving and often-volatile scrap industry.

The quality and supply of heavy melting steel scrap have changed drastically in the past decade. The main driver of the change has been the export market, according to mill buyer and broker sources, but also draining the pool are the sharply higher prices demanded by dealers for all grades of scrap, some buyers said.

"For the most part, P&S (plate and structural scrap) has stayed the same. It is the No. 1 heavy melt that has changed, and that's mainly because of the export market," one mini-mill scrap buyer said, noting a dramatic change in the supply of heavy melting steel scrap in the past few years.

A key reason for that is the change in the mix of exporters' heavy melt sales to their offshore customers. Traders are now selling cargoes of 80-20 and 70-30 heavy melt mixtures rather than the solely quarter-inch-thick cargoes of No. 1 heavy melt. The 80-20 heavy melt grade is expected to include about 80 percent of No. 1 heavy melt and 20 percent of No. 2 heavy melt; likewise, 70-30 is a 70-percent cargo of No. 1 heavy melt and the balance No. 2 heavy melt.

Mill buyers might dislike the U.S. scrap exporters' combo of heavy melt, one mini-mill broker said, but it's better than what they are seeing from some European export yards. "They call it 80-20 and 70-30," one former steel executive said, "but I think it's more like 10-90."....