Comment: 2011 shaping up as a banner year for scrap business

Sep 30, 2011 | 07:00 PM | John Ambrosia

Tags  Scrap Prices, John Ambrosia, AMM Comment

With the first three quarters of 2011 in the books, prices for scrap today are at their highest levels in history when measured against annual averages.

The composite price for No. 1 heavy melt, No. 1 dealer bundles and shredded scrap averaged $449.75 per ton in the first nine months of this year, about 6.5 percent ahead of 2008, when the three grades averaged $422.45 for the entire 12-month period. If prices remain anywhere near current levels, 2011 will set a record for scrap value.

It has been a banner year for many in the scrap industry, with demand for scrap and its accompanying profit margins maintaining strong levels. The big question is whether those prices and margins will hold up through the rest of the year.

"It wouldn’t surprise me if when the year is over we’re still within about $20 either way of where prices are now," a Chicago scrap dealer said this summer. "All the factors in the market point to continued strong pricing."

The average prices for secondary grades are actually higher than they were at this point in 2008 (prime grades are slightly below where they were at this point three years ago). But in September 2008 prices were on their way down in the midst of a long and deep collapse. No one anticipates such a decline this year. ....