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Philly scrap prices shrug off Midwest trend

Keywords: Tags  ferrous scrap prices, shredded scrap, heavy melt scrap, prime scrap, busheling, bundles, Sean Davidson

NEW YORK — Ferrous scrap prices in Philadelphia recorded smaller drops than Midwest markets as increased competition between steel mills and a robust export market kept a floor under April scrap tags.

No. 1 heavy melting steel scrap moved to $382 per gross ton this month, down just $6 from March levels, while No. 1 busheling and bundles shed $13 to settle at $457 per ton for April sales. Shredded steel scrap prices also bucked country-wide trends, dropping just $5 to trade at $435 per ton.

The $5- to $13-per-ton drops seen in Philadelphia scrap prices were less severe than the $10- to $20-per-ton declines recorded across other regional markets. In Chicago, shredded scrap fell $10 per ton this month, while prime grades declined $15 per ton (AMM, April 6); in Detroit, mill buyers had even more success, pushing prime tags down $20 per ton and obsolete grades down $10 per ton (AMM, April 4).

Low dealer inventories brought on by high export sales and the re-entry of a large mill prevented scrap prices in Philadelphia from mirroring national trends, sources said.

"Philadelphia prices could have dropped more if there was more inventory on the ground. One mill is paying higher prices for scrap as it seeks to win back market confidence, and export docks haven’t really dropped their prices either," one broker said.

The return of one large mill, in particular, has helped prevent other Philadelphia-region buyers from chasing lower tags, sources said.

"Heavy melt prices didn’t drop as much because the mill came out paying much higher than anticipated, and another mill followed with strong prices. So we had to chase it," a buyer at a large mill said.

Given the tightness of the market, buyers said they were surprised at their success at achieving drops of even $5 and $6 per ton on heavy melt and shredded scrap.

"It has been a strange week," a second mill buyer said. "I have no idea what’s going on. We thought it would be sideways and perhaps down a bit on primes, but then obsoletes went down. The amount it went down surprised me."

A second broker also expressed surprise over the drop in obsolete scrap prices this month.

"There is not a lot of scrap out there. I don’t know why some mills were trying to push prices down at all. Exporters need scrap, and there’s no extra scrap coming in the spring cleanup," he said.

Plate and structural scrap was the only obsolete material to drop significantly this month as a handful of demolition jobs have started in close proximity to one large mill, with prices dropping $12 per ton to $423 for April, sources said.

"Plate and structural scrap dropped a lot more because one mill is benefitting from the demo jobs going on around it and another mill did not buy any plate and structural scrap this month," another source said.

A source at the nearby mill confirmed he was benefitting from the windfall of scrap, noting he had managed to negotiate prices down as much as $16 per ton. "There are lots of demo jobs around us. It doesn’t happen every day, so we get to take advantage of it," he said.

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