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
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
couldnt 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
didnt 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, werent so forthcoming with
accolades. That currency changes allowed other substitutes to
enter the market didnt help those reliant on prime scrap
We got hit hard due to the mild weather and a large
steelmaker importing three cargoes of pig iron through New
Orleans. They sold what they didnt need. It was cheap
Russian imports that came in scattered over the winter months.
They bought Russian and Ukrainian cargoes at prices ranging
from $440 to $448 per tonne c.f.r. New Orleans, one
source said. What they didnt need they offered to
several mills with pig iron RFQs (request for quotations). They
left $15 or $20 per tonne at the table when closing those
deals. That got in the way of a lot of plans that some scrap
guys had. So its been a different market because of the
irregularities. Its become a casino now.
To compound sellers woes, when Brazils currency
lost value vs. the U.S. dollar, more substitutes made their way
to the domestic market from Brazil.
School was out at that point, a second source
said. We were trying to compete with the imports and by
March we still had unsold prime scrap on the ground.
And it could have been a lot worseor a lot better,
depending on which side of the transaction you were on. By
March, steel mills renewed their dislike for export markets
when strong offshore demand refused to let scrap prices sink
After negotiating a $20 increase to $520 per gross ton for
No. 1 busheling in Chicago in January, news of Januarys
pig iron imports and Februarys imminent deliveries
allowed buyers to force a $45 drop to $475 per ton in February.
And that was just for the few that brokered early deals; spot
prices for much smaller tonnages fell after the first 12 days
of February, with sellers fearing the worst was yet to come,
Turkey had different ideas. By the third week of February,
Turkish mills took in about a dozen bulk shipments. By the end
of the month, AMM had confirmed 18 bulk cargo sales.
The resurgent export demand kept cut grades and shredded steel
scrap prices steady, evidenced in March when they trended
sideways or even up a few dollars in some markets while prime
grades dropped a further $10 to $12 per ton across the
The relatively smaller tonnages of prime scrap (compared
with shredded and obsolete grades) that found their way into
bulk vessels headed for Turkish shores was enough to keep the
floor from falling on domestic prime prices, according to some
Export markets kept domestic prices honest in March.
There is a lot of pressure on the U.S. scrap market from
exporters. Any time domestic mills try to drop prices by $30
per ton or more, they get a big backlash. It happened this
winter, a third source said.
Much like the weather, few can predict how prices will trend
in the coming months, or what further surprises mills have in
store for 2012. But sellers have found some comfort in knowing
that whether domestic or export, when extremes hit theyve
got one of the two to fall back on. All things being fair,
consumers should have their own fallbacks to check extreme
price increases. Earlier this year, they found it in cheap raw
material imports. Are there others?