What a difference a year
makes. At AMMs fifth annual Steel Scrap
Conference in Chicago in November last year, much of the talk
was about the remarkable run of stability the market had seen
during 2011 up until then.
The past 10 months have
been a sea of tranquility in terms of pricing, Allan
Goldstein, president and chief executive officer of AMG
Resources Corp., Pittsburgh, told conference attendees.
However, it changed this month and scrap took a tumble.
It is always easier to analyze it after the fact, and I believe
it is a sharp dip in export demand. November was the
first month last year to experience any significant drop in
scrap value, although prices rallied in December.
In January 2011, average scrap
prices--a composite of No. 1 heavy melt, No. 1 dealer bundles
and shredded delivered to consumers in Chicago, Philadelphia
and Pittsburgh--stood at about $462 per gross ton, their
highest level since just before the global economic collapse
and one of the highest levels in history. The year was marked
by a nearly unprecedented level of stability, as prices barely
moved more than a few dollars month to month between March and
October, leading to the highest average annual scrap price in
Although prices barely
fluctuated in 2011, this year has been an entirely different
story. Scrap prices averaged $468 per ton in January 2012--no
year in history had ever started with prices that high--but
since then have fallen to around $323 per ton in October.
At the Institute of Scrap
Recycling Industries Commodities Roundtable Forum in
Chicago in September, many spoke of a changing environment in
scrap markets. Michelle Applebaum, managing partner at
Chicago-based Steel Market Intelligence, said that
volatility is here to stay, reflecting an overall
disequilibrium in nearly all aspects of the steel industry.
Others voiced concerns about scraps wild ride.
Goldsteins words last year
were not only descriptive, but prescient. Although overall
domestic raw steel output has crept up somewhat during 2012,
the ferrous scrap export market has been flat to down. The
result has been a scrap market that so far has been defined by