CHICAGO Pricing indices for most commodity metals fell for the third straight month in June, with some off by double-digit percentages compared with the same month last year, according to the Bureau of Labor Statistics latest producer price index (PPI) report.
The PPI for steel mill products fell 1.3 percent from May and 3.2 percent from June 2011, while the PPI for iron and steel scrap tumbled 12.4 percent from May and 18.3 percent from a year ago.
An East Coast flat-rolled service center owner said hes been talking to scrapyards from Chicago and Detroit to the Eastern seaboard. "They are saying the last decrease of $45 (per ton) is the last onethe absolute bottom of the market," he said, referring to AMMs consumer buying price for shredded automotive scrap in the Chicago market.
Steel producers today cannot buy at the lowest number because of Turkish exports and slim scrap generation, he said. "Dealers are unwilling to give them the full effect (of the published price). Why give it away when theyre all predicting higher pricing next month?"
"There are a lot of wild-card factors out there," a source at a full-line carbon steel distributor in the Midwest told AMM. "The one item that hasnt hit the market yet is the cost of the (Midwest) drought. It will drive crop prices through the roof. And we still have Europe and Chinas slowdown hanging over us. I dont see any huge positives out there yet."
The East Coast service center owner acknowledged the European and Asian demand factors, but noted that foreign steel pricing is higher and imports have dropped. Domestically, he said, if steelmaker ArcelorMittal USA Inc.s labor talks (AMM, July 3) hit a snag, "all bets are off. If we get close to the end of August and there is no settlement, youll see antsy people trying to buy or cover."
He believes the domestic market is at the bottom of the steel cycle "and about to go in the opposite direction, starting next month. The light at the end of the tunnel is coming."
"Everybody is realizing there is too much steel being made and not enough being consumed. Were looking to the brainpower of the steel market to act responsibly and fit production into a consumption equation that works," a source at a Great Lakes coil processor said. "A lot of us go to bed at night praying that ArcelorMittal strikes. It could do wonders for everybody."