AMMs Midwest Ferrous Scrap Index spiked some 25
percent in August after a 12-percent slide in July as mills
rushed to secure inventory.
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
AMMs 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.
AMMs 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 Augusta return to Junes 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
"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 havent
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
"I dont 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,
"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