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Scrap prices look sideways: OmniSource

Keywords: Tags  ferrous scrap prices, Steel Dynamics, OmniSource Corp., Mark Millett, Russ Rinn, Lisa Gordon

PITTSBURGH — Scrap prices are expected to mimic changes in order books at steel mills going forward as the February market appears willing to just roll over, according to Russ Rinn, president and chief operating officer of Steel Dynamics Inc subsidiary OmniSource Corp.

“As you look at scrap pricing trends, it is going to follow order books of steel mills. As soon as prices move up, (scrap) will follow. So far, it has been kind of steady,” Rinn said.

Executives at Fort Wayne, Ind.-based SDI have been pleased with a continuation in order intake, they noted during a call to discuss fourth-quarter and full-year earnings.

As for the direction of the February market, it is shaping up to be flat to “a soft sideways,” Rinn said. “Could be down ten bucks or could be up by ten bucks.”

Weather has not been a factor in pushing scrap prices up, and order books at domestic mills are expected to be the primary driver.
Looking further out, Rinn does not expect 2013 to be a volatile year. “I see scrap trading largely in a range and not have spikes. If they do (have spikes), they will reverse themselves quickly,” Rinn said.

OmniSource, the company’s metals recycling division, posted a healthy fourth-quarter performance, logging higher profit in spite of fewer volumes. The division earned $25.8 million in operating profit in the three months ended Dec. 31, compared with $15.7 million in the same period a year ago. OmniSource posted $741.3 million in sales in the fourth quarter vs. $856.4 million in the same comparison.

“In our December guidance, we suggested that metals recycling was expected to deliver a stronger financial performance in the fourth quarter, and the team’s execution was even better than anticipated,” SDI president and chief executive officer Mark Millett said.

Ferrous shipments in the fourth quarter totaled 1.2 million gross tons, 5.8 percent lower than the 1.3 million gross tons shipped in the year-ago quarter. Nonferrous shipments totaled 251.1 million pounds compared with 255.1 million pounds in the year-prior quarter.

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