NEW YORK Domestic ferrous
scrap prices appear likely to settle weaker than originally
anticipated in October as some early trades and a deafening
silence from consumers point toward significant price erosion,
according to several market participants.
In the bellwether market of
Chicago, sources said at least one consumer completed some
early transactions at prices that were down $45 to $50 per
gross ton on both prime and obsolete grades.
Most sources had previously
forecast the market would drop between $30 and $50 per ton, but
on Thursday several sources said it now appears the price drop
for October will be a minimum of $40 to $50 per ton.
Poor demand from the few mills
that are out in the market with early offers and the absence of
any real activity from the majority of the other mills has led
to the heightened market bearishness, sources said.
"It sounds like most mills are
waiting to see what their needs really are, (especially as)
orders for finished goods slacken more each day," according to
one source, who completed a few sales into the Chicago region
at prices that were down $50 for shredded scrap, turnings and
prime grades and $40 lower for obsolete grades.
Outside of Chicago in the larger
Midwest region, sources reported early sales of prime grades,
including No. 1 busheling, at prices that were down anywhere
from $50 to $60 per ton from the previous months
At least two sources said there
were rumors that prime grades in certain areas of the Midwest
could drop as much as $70 per ton, although no trades were
concluded anywhere near that level.
"Early prime sales for limited
volumes were down $55 to $60, but were finding it harder
to get volumes placed. It could drop to down $70 on primes in
some pockets," one Midwest source said.
Players in St. Louis are also
expecting a drop when October pricing shakes out. "Sounds to me
like pricing will drop about $50 on most grades, give or take
$5 either way, depending on grade and destination," a source in
St. Louis said. "I am not sure how willingly sellers will offer
tons they may not be confident in seeing come across their
In Detroit, sources speculated
the weakening would be in the range of $40 to $60. In other
regions like the Mid-Atlantic, the domestic scrap market
remained largely quiet as mill buyers were absent from the
market and scrap sellers braced for low offers or no offers at
"It is going to be one of those
ugly months when you wish you were in a different industry," a
western Pennsylvania scrap processor said.
In the Pittsburgh, Cleveland and
Youngstown, Ohio, markets, no October deals were reported as of
midday Thursday. Three mills in these cities have scheduled
downtime and a fourth mill in Pittsburgh officially announced
it wasnt buying a pound of scrap this month, AMM
Two Ohio mill buyers said they
wont enter the market until Friday or Monday, while two
other mills in Ohio have reduced their buying plans.
In the Southwest, a similar
scenario of mill outages and low demand is under way.
Meanwhile, in the Birmingham,
Ala., market, a few small transactions of prime scrap occurred
Monday at levels that were down $55 per ton, and now prices are
being offered at down $70 per ton, one broker said.
Participants in Birmingham said they are largely predicting
that the cuts will be down an average of $55 per ton, prime
will be down $70 per ton and shredded will be down $50 per ton
when the deal making draws to a close.
Lisa Gordon, Pittsburgh,
contributed to this story.