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PRICE NOTICE: Chicago scrap (revised 1/8)

Jan 18, 2018 | 02:00 PM |

Tags  Chicago scrap, ferrous scrap, consumer buying prices, expansion


American Metal Market has completed the first assessment of its expanded Chicago methodology, which includes the addition of three Indiana steel mills and one Iowa mill.

The differentials between the "Chicago - expanded" and "Chicago - historical" footprints are listed below and can be viewed in this table: 



No. 1 and No. 2 heavy melt: Both of these prices are $5 per gross ton higher in the expanded footprint vs. the historical footprint. The strong demand for this grade in the historical footprint was closely mirrored in the expanded area.

No. 1 bundles: This price settled $5 per ton higher under the expanded footprint vs. the historical footprint this month. Outside of the historical Chicago footprint, this grade is not in as much demand. One Indiana mill, which has relied on bundles, is now bypassing this grade and melting a scrap substitute in its place, which served to disconnect bundles pricing from No. 1 busheling.

No. 1 busheling: This price is $10 per ton higher in the expanded Chicago market due to a combination of freight costs and Indiana mills competing with Detroit and much of Ohio for busheling.

Shredded scrap: This grade settled $10 per ton higher in the expanded Chicago index, as prices outside of the historic Chicago region are averaging $340-345 per ton.

Machine shop turnings: The price is $15 per ton higher in the expanded region due to strong demand from mills not included in the historic footprint.

Cut structural/plate, 5 ft max: There is no change in price, as demand in the historic Chicago footprint has always been strong. No other grades warranted a change in price.

Recognizing that contracts need to be adjusted, American Metal Market will continue to publish, for a period of six months through June 30, 2018, two sets of prices: "Chicago - expanded footprint“ and "Chicago - historical footprint."

Effective July 1, 2018, the words "historical" and "expanded" will be removed and "Chicago - expanded" will permanently replace "Chicago - historical." The price will be noted as "Chicago," with the additional mills included in the price assessment.

Also effective July 1, 2018: For contracts that are not adjusted during the six-month period when two sets of prices are posted, a non-market adjustment notice specifying the change in prices from the expansion will be issued for Chicago. This index will specify that the non-market adjustment is between the two indexes and not a monthly price move.

If you have any questions or comments about the proposed change, please contact Thorsten Schier at tschier@amm.com.



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