Full of Scrap: Unexpectedly mild weather blindsides industry gurus

Mar 31, 2012 | 07:00 PM | Sean Davidson

Tags  ferrrous scrap market, ferrous scrap prices, ferrous scrap pricing trends, full of scrap, Sean Davidson

This past winter will go down in the books as an unusually warm cold season that caught the scrap industry by surprise. Relatively few inches of snow on the ground meant a steady flow of obsolete scrap, both ferrous and nonferrous, thereby altering typical seasonal trends of stronger pricing as supply tightens.

The warmth-induced scrap flows prompted a hurried recalculation of some pricing and purchase orders. Like the weather gurus, scrap gurus had to make peace with not knowing what the next month, or next week, would bring. Historic data couldn’t play the willing supporter of any trend-based position as long as the weather played peek-a-boo.

But the ripple that healthy obsolete grade flows sent through the ferrous scrap industry paled in comparison with the jarring jolt it received when bulk pig iron imports flooded the market in January and February: a proper, three-bulk-cargo jolt that sent prime grades scurrying for insulation. Pig iron imports soon joined warm winter on the list of “things I didn’t expect” in the first quarter. Some, consumers and dealers alike, called it a cunning move to put a check on prime scrap prices. Others, like large-volume brokers and sellers of prime scrap, weren’t so forthcoming with accolades. That currency changes allowed other substitutes to enter the market didn’t help those reliant on prime scrap sales.....