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Chicago scrap trade kicks off at flat levels

Keywords: Tags  scrap, ferrous scrap prices, Sean Davidson

NEW YORK — A steel mill in the Chicago area entered the scrap market Wednesday to secure metal at mostly unchanged prices, leaving market participants divided on whether overall price levels would rise this month as some had previously speculated.

A number of sources reported that a consumer entered the market early and successfully booked some obsolete grades at numbers that were sideways to last month. One source familiar with the mill said the consumer bought all the scrap it needed for January at mostly sideways pricing, although others questioned just how much volume the mill had actually secured.

Grades traded reportedly included heavy melt and plate and structural scrap, although the consumer has yet to fix prices on shred and prime grades, sources said.

"It was the vendors with a large presence here that offered sideways at the start," the source familiar with the mill said Thursday. "Since we were only ever talking a sideways to up-$10 market, with the river problems, stable scrap supply and stable demand, it’s hard to push for a change. Vendors with a large presence outside of Chicago were resistant, but seem to be coming around this morning."

Sources said No. 1 heavy melt was sold to the mill at between $355 and $360 per gross ton. In December, AMM’s assessed price for No. 1 heavy melt was $358 per ton, which was itself largely unchanged from November’s $359-per-ton level.

Prior to the year-end holiday, most market players in the Midwest had predicted that January scrap prices would be flat to up as much as $20 per ton from December levels (, Dec. 21). But following the early sideways trades by the Chicago mill, some market participants said flat appeared likely to be the January trend.

"We have no firm quotes, but preliminary indications are sideways from two to three other consumers we sell to. I’m surprised that prices are not stronger, but I think this is a good indication of a less-than-robust order book," a second source said.

A third source said he also had heard that most mills will be trading sideways, "although we expect many of the mills to wait until next week to make the majority of their purchases."

Some suppliers, however, said they would hold out for better prices. "I have made no sales yet. Mills are trying to go sideways, but if they can’t fill their needs they will have to raise their prices. I think we will see better-than-sideways numbers before this is over. My fingers are crossed," a fourth source said.

A large consumer agreed. "I think dealers are reluctant to sell at sideways levels at this point. We’ve heard that maybe a couple of other consumers have put feelers out at sideways levels, but nothing has traded yet. It feels like the market could take several more days to develop. Other than some potential regional weather issues, there doesn’t seem to be much reason for any sort of sizeable move," he said.

Market rumors Thursday that another mill also was buying scrap at sideways numbers were denied by a buyer at the mill. "I am not in the market yet. I believe the market will probably trade sideways, but I am not certain of that yet," he said. "The dealers can posture all they want, but I don’t believe demand will support up money even with lower supply inventories. We’ll see, though. Most are still getting their bearings after a long layoff."

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