Search
AMM.com Copying and distributing are prohibited without permission of the publisher
Email a friend
  • To include more than one recipient, please separate each email address with a semi-colon ';', to a maximum of 5

  • By submitting this article to a friend we reserve the right to contact them regarding AMM subscriptions. Please ensure you have their consent before giving us their details.


Full of Scrap: Mixed heavy melt is no longer just an export

Keywords: Tags  Full of Scrap, 80/20 mix price, ferrous scrap, heavy melt price


There’s a common misperception in much of the North American ferrous scrap industry that an 80/20 mix of No. 1 and No. 2 heavy melting steel is consigned only to export markets, preferably to developing countries where there is enough cheap labor to hand-sort the material as it comes off the ship.

But the delivery of an 80/20 mix isn’t uncommon at domestic mills; depending upon chemistry and metallurgy demands, some mills actually seek a mix of heavy melt grades to charge their electric-arc furnaces (EFs).

“Most of the mills will take 80/20,” said one broker in east-central Pennsylvania. “Most of them won’t say anything if the weight is there. But you take the chance of getting turned away if the truck doesn’t weigh 38,000 pounds.”

The 80/20 mix—typically 80 percent No. 1 heavy melt and 20 percent No. 2 heavy melt—has always been popular with the export trade. In recent years, steelmakers in China, India and Turkey, in particular, have consumed millions of tons of the 80/20 mix. Dealers and brokers call the No. 2 heavy melt portion “light iron,” a term that goes back to the 19th Century that typically refers to material that is 18-inch thick or under. No. 1 heavy melt is typically at least 14-inch thick.

“Heavy melt has to be cut to a certain size,” one Midwest U.S. buyer said, “and if you’re going to sell it to domestic mills it has to be free of cast, lead and other impurities.”

The difference between No. 1 and No. 2 heavy melt has been fixed for close to a century. As long ago as 1918, Illinois Steel Co. specified standard exclusions when buying No. 1 heavy melt, including “pieces weighing less than 5 pounds per lineal foot . . . as well as those less than 14 inch in thickness, dirty scrap, pieces not reasonably straight, cast malleable and busheling.” The former Colorado Fuel & Iron Co. (CF&I), now owned by Evraz Group SA, specified two divisions of heavy melting steel: railroad and agricultural. In the latter category, CF&I rejected “rake teeth, sickle bars and other light material.”

The fear of having a truckload of material rejected at the local mill is what keeps most coastal dealers shipping the 80/20 mix to export yards. One rejection at a mill can cost a dealer $500 or more to bring a truck back to the yard.

“If you go to the dock, there’s less hassle and no schedule,”one East Coast dealer said. And even though the dock will typically offer less money—often as much as $20 per ton less than domestic mills—dealers usually are paid quickly for their material.

“A lot of dealers maintain two piles of material,” one Canadian buyer said. “When a dealer has that second pile of scrap and 10 to 15 percent of it isn’t acceptable to the local mill and he can get the same money or $5 or $10 less by sending it to an exporter and nothing gets rejected, well, what’s he going to take?”

Another East Coast broker noted that with piles labeled for export, material could “include everything up to a dead horse—pretty much anything that would stick to the face of a magnet would go in the export pile.”

Most brokers and buyers point out that having an export presence has kept prices higher than they normally would be, especially for dealers and brokers with access to export yards. “Export has been great for the dealers,” the Canadian buyer said. “They get rid of stuff that comes into their yards that they have to take.”

The biggest difference between what a domestic mill will take across the scales and what is acceptable on the docks is safety. Domestic mills won’t take closed cylinders, such as car drive shafts, empty Freon or acetylene tanks, or even tubing.

“You need to cut tubing with shears because the mills are concerned about water getting in there,” one dealer said.

Overseas mills employ enough labor to hand-pick unsuitable materials from a cargo of an 80/20 mix. With labor in some port communities costing less than $1 per day, hand-picking cargo is a viable option for steelmakers in the developing world.

But quality is becoming an issue overseas. One longtime Philadelphia broker noted that 80/20 is really a misnomer. “If it’s going overseas, it’s more like 65/35,” he said. “When you get into the inner city, you get a lot of peddler traffic. We’ve got people bringing discarded shopping carts into our yards.”

It has long been common knowledge in the business that material that would not pass muster with a domestic mill buyer typically won’t raise too many questions in the hold of an ocean-going vessel. “Stuff you couldn’t ship to a mill in Pittsburgh, Cleveland, Canton (Ohio) or wherever ends up going east to the docks for export,” an East Coast broker said. “For some time now, that stuff has had a home on the docks.”

No. 2 heavy melt typically has more copper content than No. 1 heavy melt. That doesn’t always bother foreign mills. “Turkey often looks the other way because they generally like copper in the mix when they are making rebar,” the Philadelphia broker said. “They feel the copper is good for corrosion quality. As a result, anything with copper in it ends up going to Turkey.”

Cast is another material that often finds itself in the 80/20 export mix. Unacceptable at domestic mills unless clearly labeled, cast is often sought by foreign mills. “The Turks tell us they like a little cast in the mix because of the carbon content and the density,” one broker said.


Have your say
  • All comments are subject to editorial review.
    All fields are compulsory.



Latest Pricing Trends

Poll

Are you stocking more inventory today than 18 months ago?

Yes
No


View previous results