Scrap tags ride wave; stormy seas lie ahead

Dec 07, 2010 | 11:18 AM |

There is no denying that the overheating scrap market is causing waves throughout the industry, with Nucor Corp.'s unprecedented decision to raise flat-rolled prices for the third time in as many weeks.

While steel buyers are bracing themselves for a rough ride, scrap players are enjoying current conditions and hoarding some material to sell at even stronger prices in the first two months of the New Year.

"Everyone's inventory is pretty low, especially the mills," one eastern scrap industry source said. "Look for sizeable increases as December goes on and into January. I'm already hearing prime scrap will be north of $480 a gross ton. While much of the increase to date is due to domestic needs, export continues to be a factor. I don't think dealers are selling much right now as they know the market is moving higher."

Prices have jumped by as much as $45 per long ton this month, almost double what many had anticipated and an about-face from what had been the traditional mill practice of hibernating from the scrap market in December.

Prices have risen across the board in most of the major steelmaking districts regardless of grade, with some paying as much as $385 per ton for No. 1 heavy melt, up $40 from last month. Selling prices for No. 1 busheling in key markets like Chicago, Cleveland and Pittsburgh range from $430 per ton to as high as $440 for local suppliers. More remote yards are being offered more to help offset freight costs and as an incentive to obtain more melt material. Shredded prices topped $400 per ton on a delivered-to-the-mill basis early in the month and was still on the rise this week.....