CHICAGO — The iron and steel scrap producer price index (PPI) took a nosedive in October, falling 11.4 percent from the previous month and 27.3 percent from the same month last year, the latest Bureau of Labor Statistics (BLS) report shows.

"Scrap (prices) will be up for December," a bar market source said this week, "but who knows how long that lasts, because there’s not too much upside (for demand) after December."

The top sales executive for a multi-branch service center questioned the scrapyard-to-mill business model, saying the dynamics allow certain parties to renege on negotiated tons when demand or prices slip, leaving too much material on the ground and putting further downward pressure on pricing. "This is what has to change," he said. "How about if you agree to take 10,000 tons, then you take 10,000 tons?"

The PPI for steel mill products fell 1.9 percent last month following a 1-percent increase in September, the BLS data show.

Despite sheet producers’ recent announcements of a $50-per-ton increase for December (amm.com, Nov. 7), a source at one Mississippi Valley steel processor predicted that "if the price goes up, it’s probably a $20 event. We’re not seeing a lot of additional demand, (so) we don’t anticipate much change in the pricing game."

The October PPI for aluminum mill shapes rose 1.4 percent from the previous month, while the aluminum scrap index increased 4.9 percent. The PPI for copper and brass mill shapes rose 2.8 percent and copper scrap moved 1.2 percent higher in the same comparison.