NEW YORK Ferrous scrap prices in Chicago have dropped between $45 and $51 per gross ton for different grades as buyers took advantage of weak demand and strong prime scrap flows, as anticipated.
Scheduled outages at some mills and a push for more prime scrapsuch as No. 1 bundles and No. 1 bushelingin a market flush with the material but tight on shredded supply forced prices to move toward the higher end of a previously suggested $30 to $50 drop.
Mills in Chicago and the surrounding area might not have succeeded in sending prices down $60 to $65 per ton, as their counterparts in Detroit did last week (amm.com, Oct. 4), but buyers contacted by AMM said they were content with the $45- to $50-per-ton drop from prior month levels for most products.
As expected, obsolete grades fared better than the prime grades in Chicago.
Volumes were traded over the course of last week, with early sales taking a bigger hit and late-week sales securing modest rebounds, sources said. The prolonged trading resulted in many mill buyers and suppliers reporting trades within a $10 range, which some said were narrower than previous months.
With most of the volumes transacted in Chicago, No. 1 heavy melt dropped $48 per ton to $310 for October deliveries, while shredded fell $47 to $335 per ton, according to market participants.
Meanwhile, plate and structural scrap proved to be the most resilient of the steel scrap grades, dropping $45 per ton to $325 for this month.
In the prime scrap market, No. 1 bundles traded a tad weaker than No. 1 busheling and was the worst-hit scrap grade in October. No. 1 bundles settled at $331 per ton Monday, down $51 from September, while No. 1 busheling fared marginally better as it dropped $50 per ton to $337 per ton.
Buyers at several mills, traders and suppliers suggested that the late-week strengthening in prices was likely an early sign of a market that has hit bottom.
"I think the domestic market has bottomed unless mills order books go off some more," one source said, echoing a popular market opinion.
"I dont know if this means prices will come up anytime soon, but I think it could go higher in December and January while moving sideways in November. Perhaps there will be movement within the range we saw this month," according to a second source.
However, a few sources refused to speculate, indicating that the market has discussed the possibility of price floors during several months this year.
"Who knows when things may turn around? Everyone still needs a cash flow, so they need to sell some tonnage. $300 per gross ton scrap is still a lot of money to tie up even if the cost of money is cheap," the second source added.