NEW YORK Uncertainty over
ferrous scrap supply heading into the winter and strength in
some steel sectors, including flat-rolled products, have
combined to send November scrap prices in the Midwest soaring
above earlier expectations.
Among the key Midwest areas of
Chicago, Detroit and St. Louis, Detroit proved to be the
strongest market this month after settling early at $55 per ton
higher for most grades (
amm.com, Nov. 5).
But suppliers also came out
swinging in Chicago and St. Louis, with mills securing the bulk
of their November melting needs on Tuesday and Wednesday at
prices well above Octobers levels.
"(Midwest) pricing is up $45 to
$55 (per ton), depending on the starting point. Some dealers
talk about sitting out the market at these levels, but we seem
to have found ample willing sellers," one market source said,
adding that "the ranges definitely seem to be wider this
In Chicago, a modest reduction
in the supply of prime industrial scrap from manufacturing
plants that took outages over the past few weeks helped prime
tags settle $53 per gross ton higher for November. Despite a
wide trading range, depending on the supplier and mill, No. 1
busheling settled at $390 per ton and No. 1 bundles at $384 per
ton. Shredded scrap prices recorded a $52-per-ton increase from
Octobers levels to $387 per ton, according to inputs from
a large cross-section of the market.
Meanwhile, sources said supplies
of plate and structural scrap appear to have tightened in the
past few weeks, whichcombined with the return of a large
mill hungry for scraphelped 5-foot plate and structural
scrap achieve a similar $52-per-ton increase for November.
At the same time, No. 1 heavy
melt lost some favor in melt-shop requirements this month and
settled at a more modest increase of $49 per ton, bringing the
November price to $359 per ton.
St. Louis also logged a run-up
in scrap pricing this month, although not to the same degree
recorded in other Midwest cities for most grades.
St. Louis-area mills entered the
market at different points over the past five days to secure
volumes at varying prices over October levels, according to
sources, and the overall market settled $45 per ton higher on
obsolete grades and $50 per ton higher on prime grades.
The strength in this
months Midwest market came "from low mill inventories and
lower prime scrap production levels," a second source said.
A third source agreed. "Overall,
the price discovery turned to the supply side, with inventories
not as available as usual. I think this will be the theme for
the next two to three months," he said. "Mills had better hope
not to get caught short on the raw material side while working
for increased sales of finished product. This market is primed
to take off if anything in the supply/demand equation gets more
Other suppliers agreed that
prices could rise over the next few weeks.
"I am of the opinion that we are
going to see higher prices sooner rather than later. I
dont know how long it will last, but the flows of all
obsolete grades are really weak and its too expensive to
replace what we are selling," a fourth source said.
However, a few others suggested
that Novembers $50- to $55-per-ton jumps in several
regions of the country could be at or near what the rest of the
year has to offer.
"I think thats it. Maybe
December will offer $10 to $15 more, nothing more," a fifth
"This market should have been up
$20, not $50," a sixth source said, "and I suspect this will
just lead to more volatility in pricing in the coming