NEW YORK Domestic ferrous
scrap prices look set to record larger-than-anticipated
increases in the Midwest this month after steel mills in
Detroit settled $55 per gross ton higher late Monday.
Previous indications that
Detroit could settle $40 per ton above October prices went by
the wayside late Monday after suppliers held their own against
mills who felt that the market warranted a smaller increase,
By Monday afternoon, all but one
consumer in the Detroit area gave in to supply-side
fundamentals to settle at a $55-per-ton increase for November
across all grades. "The $55 increase was kind of a compromise
number. Suppliers wanted up $60, consumers were holding out for
up $50 and then everyone finally settled at up $55," said one
source in Detroit.
A second source, however, said
that the final increase was not reflective of actual steel
industry performance. "The market should have been up $20 to
$30 for November. It went up $55 because dealers scared
consumers about supply in December and maybe some mills are
short of scrap," he said.
Although Detroit was the only
city to see November prices settle Monday, some early trading
reported out of other Midwest markets like Chicago and St.
Louis indicated that prices may settle up anywhere between $40
and $55 per ton in those areas, depending on the grade.
"Pricing seems to be driven by
the supply side, as Im not sure that demand is
dramatically different than last month, although some consumers
evidently ended up short last month," a third source said.
A fourth source said the
majority of this months pricing increase was largely a
result of the significant decrease recorded last month. "I
dont think theres any doubt that certain key
indicators driving pricingsuch as export activity, steel
sales and seasonal factorsplayed a role in determining
that steel scrap pricing needed to increase. That said, the
quantum that were facing is nothing more than a
correction, and not based on sound fundamentals such as a true
systemic shortfall of available scrap," he said.
The $55-per-ton increase in
Detroit nearly returns prices to September levels, as most
grades dropped between $60 and $65 to start October.
Early indications in other
markets also suggest a possible return to near, or even on par
with, September pricing levels.
"(It) sounds like Ohio Valley
and the South are a little stronger than the Midwest from what
Im hearing," a fifth source said.
Prices in the Ohio Valley and
Southeast have yet to settle, although markets did see early
In Cleveland, one mill is paying
up $65 per ton over October levels for No. 1 busheling, while a
second mill is paying up $60. The second Cleveland mill entered
the market at up $60 per ton for shred but secured its other
needsincluding No. 1 heavy meltat up $55.
"The mills beat down the market
too much and it is now biting them," a Cleveland-based broker
said of the apparent increase.
In Cincinnati, prices were
shaping up to be just $10 shy of September levels, with two
mills paying up $45 per ton to secure their melting needs.
Birmingham, Ala., was still
waiting for one producers brokerage firm to enter the
market early Monday afternoon, although a second producer who
doesnt operate in the Southeast had its brokers actively
seeking scrap, sources said.
"This producer came into the
South looking for scrap and we havent seen that in six
months, which leads me to believe that they sense the shortage
is much longer term," a scrapyard executive said.
A second regional source said
the producer was looking to springboard scrap out of the
Southeast because it is short material. "They are paying
aggressive numbers and are offering up $60 and are seeking a
60-day supply," a broker said. Some mills also are expected to
buy heavy in November knowing that December is a short shipping
month for scrap dealers.
According to a second scrapyard
source, all the Birmingham mills are in need of scrap this
month, indicating that prices in the area could log a
"The mills totally destroyed the
collection system on obsolete scrap by taking the market down.
They were playing with fire and have now lit themselves up," a
local shredder source said.
Lisa Gordon, Pittsburgh,
contributed to this story.