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Midwest Ferrous Scrap Index surges

Keywords: Tags  Midwest Ferrous Scrap Index, scrap, ferrous scrap, Midwest


SAN DIEGO — AMM’s Midwest Ferrous Scrap Index spiked some 25 percent in August after a 12-percent slide in July as mills rushed to secure inventory.

Greater-than-anticipated demand coupled with fears of crippling flows into scrapyards sparked an early race for tons this month, which sent prices soaring. Within the first three days of August, Midwest steel mills had secured most of their requirements, with some mills returning to peak demand levels after pulling back earlier this year.

The renewed interest sent AMM’s Midwest Ferrous Scrap Index soaring, with some scrap prices regaining around $80 per ton in August after dropping around $100 per ton over the course of the previous two months.

AMM’s index is calculated on a dollar-per-gross-ton basis for No. 1 heavy melt, No. 1 busheling and shredded scrap delivered to mills across the Midwest region.

For August, the No. 1 heavy melt index surged 26.1 percent to $377.76 per ton from $299.53 in July, a $78.23 increase.

The shredded scrap index soared 23.9 percent, or $78.87 per ton, to $408.73 per ton from $329.86 in July, while the index for No. 1 busheling improved 24.1 percent, or $81.36 per ton, to $418.26 per ton from $336.90 in July.

The large monthly increases surprised many suppliers, although buyers at mills said the spike made sense as they needed to ensure scrap flows.

"We were expecting an up $50 market in August—a return to June’s price levels. But I guess a little bit of panic from mills, especially on shredded, sparked the whole thing," said one source.

Buyers at some mills admitted they were spooked by reports of dwindling flows into dealer yards.

"The tightness in supply caused lots of concerns from mills. From what I saw and heard, flows had dropped. There was also more demand than expected," said a buyer at one mill. "One large steel producer came out very aggressive after two large brokers came out early and picked up tons. That set the tone."

A third source said another factor behind the spike was missed deliveries in July.

"Some mills haven’t received scrap from July orders, and that exacerbated the situation coming into August. I also think mill order books must be strong," he said.

But others disagreed with that characterization.

"I don’t think order books are any different. Mills were just short in scrap. So it was supply driven," said a fourth source. A fifth source added that it appears that electric-arc furnace mills are busier than integrated mills capacity-wise.

But after the early, opportunistic buying by two large brokers followed by the aggressive entry of two large producers, the Midwest market saw prices taper off slightly by the end of trading this month, sources confirmed.

"The market started higher and then pulled back a little," said a sixth source. "Most of the buying was done at the higher side of pricing since prices only started to cool after mills had already made the majority of their buy."


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