NEW YORK Tighter scrap
flows due to cold weather, reinvigorated demand from
steelmakers and strengthening export markets will likely
bolster domestic ferrous scrap prices in January, market
Every scrap market participant
surveyed by AMM this past week on their January
outlook predicted steady or positive pricing trends for the
coming month, with about half of respondents expecting a flat
to slightly up market and the other half expecting a larger
increase of about $10 to $20 a gross ton.
Only a small number speculated
that prices would rise more than $30 per ton when January scrap
pricing settles, while not a single player forecast a pricing
But those predictions could
change if a major eventsuch as a large snowstorm, a
"fiscal cliff" shutdown or a possible export dock labor
strikecomes into play in the next several weeks, sources
In the Midwest, for example,
several sources said January pricing will largely depend on how
much snowfall the region receives over the next 10 days, as
well as how quickly transportation along the Mississippi River
"We do have this large winter
storm hitting this area. ... It looks like Wisconsin and
Minnesota will be hit the hardest," one source said. "If export
takes off, we could see a stronger January than expected, or if
more of the country is hit with winter weather on a wider-range
Others said demand from
millsboth domestic and foreignwill play a larger
role than the weather.
"I suspect that supply will
tighten as the export market appears to have recovered in
recent days. Mill operating rates are posed to be strong in
January as reports of mill lead times are well into January.
Given these developments, domestic scrap prices could likely
move up a minimum of $15 to $20 and potentially higher on some
grades," said a second source.
One bullish supplier speculated
the increase would be between $20 and $30, based on demand.
"I think the mills laid back in
December and didnt want to build inventory early. January
has always been an up month. Ill be amazed if it
isnt this time," he said. "Enough severe weather might
push that up to a $40-or-better jump."
Such a run-up, however, could
mean a sharp pullback the following month, he said.
"I predict the dealers will
empty their yards, flood the market and set up yet another
February drop, probably $30 to $40. It would take one heck of a
freeze-down from Iowa to Pennsylvania to prop up February," the
But other suppliers in the
Midwest are not so confident that January prices are set for a
"The mills appear to have
adequate supplies on hand, and with hot-rolled coil pricing
softening by approximately $20 (a ton), there is no appetite on
the mills part to pay more money to secure supply of
scrap. There are reportedly large inventories of prime
overhanging the market in Chicago. (Some Midwest mills) stand
to gain market leverage if the Mississippi (River) closes. This
also works into their thought processes," said one supplier,
who predicted a flat market.
Weather alone will not be enough
to support scrap prices, in his opinion.
"The mills are not fully booked
for January and will face downward pricing pressure early in
the month from the warehouses. Weather could drive the market
higher, but the current storm is likely to have no effect as
most dealers expect flow to slow (this week) and to be running
with skeleton crews and little industrial scrap for the next 12
to 13 days," he said.
In the Mid-Atlantic region, most
speculated there would be an increase of $10 to $20 a ton for
January, propelled by a recent two-week spurt in bulk
However, one East Coast exporter
was not so bullish. He expects the uncertainty surrounding the
fiscal cliff to temper any price gains, and, as a result, he
expects that Decembers prices will simply roll over into
"Some people feel it will jump
$20 or more, but I do not see it that way. There is too much
uncertainty at this time. Steel service centers are not going
to make any major moves, heavy equipment manufacturers are not
going to go out on a limb and construction contracts will sit
on the shelf," he said.
A supplier to eastern
Pennsylvania mills said his original bullish projection is also
losing steam. "The general consensus a week ago was that
pricing would be headed for a considerable boost of $24 to $35.
The optimism has faded a little bit and we might see a smaller
increase between $5 and $15," he said.
In the Ohio Valley, one mill
buyer said he senses the market will be flat to up $10, while a
second Ohio mill buyer said he expects that prices could push
In the Southeast, scrap
suppliers are largely expecting prices to move higher with mill
demand outpacing the flow of scrap into dealers
Meanwhile, in the Southwest,
mills are expected to make full buys and prices appear to be
headed sideways in spite of low inventory levels. "We are
playing in the dirt over here. We may not finish this
months orders. The flow is really slow and (theres)
not much coming in so will probably sell less because our yard
inventory is low," said a supplier to the Southwest mills.
Lisa Gordon, Pittsburgh,
contributed to this story.