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 month."
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 unbalanced."
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 source said.
"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 months."