NEW YORK The Chicago ferrous scrap market has settled mostly sideways this month across most grades, with busheling scrap recording slight price weakness.
A narrow spread between prices of shredded steel scrap and the prime grade of No. 1 busheling scrap encouraged several mills to increase their purchases of busheling scrap and lower their shredded intake, market participants said.
"Electric (furnace) mills are buying more busheling this month than shred, which should have pushed down the price of shred. But some people took the easy way out and just settled for a sideways market without trying too hard to negotiate better shred prices," one source said.
As a result, shredded prices remain unchanged at $430 per gross ton. However, No. 1 busheling scrap has fallen $3 from last month to $445 per ton for May, sources said. The slight drop was despite a push by some mills to keep busheling prices flat, some sources said.
A second source said integrated mills entered the market early at sideways prices on busheling in order to prevent electric-arc furnace (EAF) mills from pushing the price down.
"Integrateds came out sideways and the EAFs came out down. They balked when we said we were keeping prices sideways. I heard of some prime sales down a little, but that was the extent of it because there were other buyers for prime. We were able to sell to a mill that never buys busheling. Another mill that usually buys shred bought busheling, so we could fight the drop," he said.
"The integrateds vs. the EAFs is always a possibility. It used to happen a few years ago," according to one consumer, who also went sideways on busheling this month.
Consumers made early attempts to drive busheling prices down by as much as $10 per ton, but the fear of closing in on shredded prices prevented the full drop, a large broker/consumer said.
"Its not a perfect market. I understand whats happening, but busheling should really have dropped due to excess supply. Or shred should have dropped with more mills chasing busheling," he said.
Most sellers said they held their ground because they were in no hurry to sell prime scrap.
No. 1 heavy melt scrap prices were unchanged from last month at $405 per ton, with only one consumer saying he had managed some buys a couple of dollars lower. "I got more heavy melt offred to me than normal, so I took advantage of it," he said.
Buying programs for most mills were a tad lower on heavy melt, but not enough to significantly impact the market, sources said.
Plate and structural scrap also trended sideways, with 5-foot max prices flat at $425 per ton.