NEW YORK Midwest ferrous scrap prices have settled sideways for January as dealers gave in to mills demands for unchanged prices to kick off the year, bucking historical trends.
Most Midwest mills in the Chicago, Detroit and St. Louis areas completed trading between Friday and Monday, sources said, as numbers identicalor nearly identicalto those in December poured in.
It was the first time since January 2009 that ferrous scrap prices did not strengthen from December to January, and the break from typical patterns caught many off guard.
"It really surprised me. I thought it was going up," one supplier source said. "Supply coming in was off a bit, but then it seems mill orders werent as strong."
Sources in Chicago said suppliers inability to ship outside the region due to Mississippi River transportation issues, combined with steady flows of scrap into dealer yards, allowed steel mills to negotiate unchanged prices.
As a result, No. 1 heavy melt prices settled January at $358 per gross ton, with No. 1 busheling at $390 per ton and shred at $386 per ton.
"I was expecting sideways," said a buyer for a mill in the Chicago area. "I think demand and supply are in relative balance right now for a variety of reasons."
In other Midwest areas, such as Detroit and St. Louis, the market followed early price developments in Chicago (amm.com, Jan. 3) with keen interest but held off trading until more Chicago-area mills settled prices. By late Friday, Detroit- and St. Louis-area mills entered at sideways numbers, and several buyers reported having no issues securing scrap.
"I think there was way too much hype put into a couple of inches of snow. There was no resistance at all to sideways numbers," a second mill buyer said.
A third mill buyer who reported "no difficulty in securing tons" said he was "turning tons away."
Sources were divided on whether overall demand for scrap was weaker this month. Several suppliers said they were able to sell the volumes they had targeted, and only a couple of mills said volume dropped a few percentage points.
"We were able to sell everything we wanted. Originally, I thought we could get higher prices so it is disappointing," a supplier source said. "However, more than one mill said there is concern that some finished selling prices are shaky. And if the order books dont hold, demand would be less next month."