LOS ANGELES Signs that
scrap prices are losing steam, combined with a continued lag in
structural steel demand, have some steel buyers altering their
outlook for wide-flange beams.
"A month ago, everyone was
expecting things to improve pricewise," a southeastern
distributor said. "Now, that isnt necessarily the
producersfollowing a $52-per-ton boost early this month
in AMMs consumer buying price for shredded
automotive scrap in the Chicago market, the basis for many
mills surchargeshave raised their published
transaction prices on wide-flange beams by $35 per ton to $780
per ton ($39 per hundredweight) f.o.b. mill on most core sizes
amm.com, Nov. 19).
The new price was due to become
effective with shipments ranging from Nov. 12 to Dec. 1,
depending on the producer, and under normal demand conditions
would already be in effect. But buyers have, nevertheless,
continued to order material off mill floor stocks at
"We put some orders in this week
for November shipment," one service center buyer said.
While expectations among buyers
until recently were for scrap tags to continue rising over the
next few months, that outlook appears to be changing with
indications that the scrap market is losing steam. Portland,
Ore.-based recycler Schnitzer Steel Industries Inc. said
Tuesday that its average net selling prices for ferrous scrap
in its fiscal first quarter ending Nov. 30 are expected to
decline some 5 percent from the previous quarter, while ferrous
sales volumes are expected to be off about 20 percent (
amm.com, Nov. 27).
This has altered expectations of
some steel buyers, who had been anticipating firming prices
over the next few months but now see the possibility that scrap
might instead go sideways, if not actually head down again.
"Im not looking for the
same run-up in scrap prices that weve seen in the last
few years," one Midwest distributor said, noting that what has
become an annual New Years price rally for his own steel
products might not continue as far into 2013 as it has in past
Most long product buyers noted
that a fall of $20 per ton or less in scrap tags probably
wouldnt trigger mill price cuts, in the interest of
maintaining market stability. However, a substantially larger
fall in scrap could force producers to adjust their prices,
most observers agreed.
Moreover, the distributor market
remains under pressure, especially in the West. Recent arrivals
on the West Coast of South Korean beams bought by at least one
major distribution chain at some $37 to $38 per cwt ($740 to
$760 per ton) ex-dockcompared with a laid-in domestic
December price into this market at $44 to $45 per cwt ($880 to
$900 per ton)could put added stress on resale prices,
market sources said.