ISTANBUL Chicago emerged as the strongest market for ferrous scrap in the Midwest this month, with mills leaving little to chance as they sought to fill their order books.
Mills in the Chicago region initially entered the market at down $10 per gross ton from January levels on all grades, but by the end of trading allowed dealers to regain a little ground, with most scrap grades ultimately settling down about $9 per ton.
Although at least one mill paid down $5 for some tons of No. 1 heavy melt, the overall market settled at $349 per ton in Chicago, down $9 from January.
Shredded scrap recorded a similar trend in Chicago, settling down $9 to $377 per ton, while most prime grades shed an extra dollar to settle down $10. As a result, Chicago No. 1 busheling settled at $380 per ton on Feb. 7.
The $9- to $10-per-ton drop in Chicago, depending on grade, comes on the heels of a $20-a-ton drop in the Detroit region earlier this week (amm.com, Feb. 6).
"The market expected prices to be down some more. But realistically, flows into yards are down. A cold weather snap just as the market began trading had a psychological effect, and what played on minds is that we still have a winter left," one source said of the Chicago market. "Mill demand was the same and Chicago was the weaker market in recent months, so its more an equalization against neighboring markets."
Meanwhile, mills in neighboring northwest Indiana were able to drive prices down a lot further, especially on prime grades, which many reported were down as much as $15 per ton.
"Mills in northwest Indiana took advantage of some cheaper scrap from the east. They were able to buy lower than Chicago and the thinking is that, with that eastern scrap and home scrap collections, they could wait until next month. If they fall short and come west into Chicago for scrap, they will have to pay up," said a second source.
Chicago and northwest Indiana mills typically trend together, so Chicagos relative strength surprised some suppliers.
"Theres so much prime scrap coming in from Canada, I dont know why Chicago mills went down only $10 on primes. It makes no sense," said one supplier.
Outside the Midwest, sources reported a similar trend of buyer resilience leading to higher-priced deals as the week progressed. In the Southeast, for example, prices bounced back from early deals that were down $20 a ton. One producer was reportedly even trying to pick up its needs at as much as down $30 a ton.
"Mills did come out and try to buy at down $20 numbers but didnt have a lot of success," said a shredder operator in the region.
But as metal recyclers refused to bite at those lower numbers, prices steadily improved throughout the week. Paid prices in the Carolinas and Birmingham, Ala., varied significantly, with No. 1 busheling scrap sales down between $10 and $20 per ton, depending on the mill, and at least three mills in the Southeast reportedly picking up their needs at down $10 a ton. The No. 1 busheling markets in both regions ultimately settled down $12 a ton.
Sources said they suspected the higher prices as the week progressed were due to mills realizing there is not a lot of scrap overhanging the market, despite overall demand remaining lackluster. "Mills were buying less, and even without a normal buying program, I was unsure if I could cover what I sell them," said a scrap processor.
In Ontario, prices settled mid-afternoon Feb. 7, with final buying levels down $10 a ton on prime grades and down $20 a ton on all other material. Meanwhile, the Pittsburgh market settled down $15 a ton across the board, except for prime bundles, which only saw a $10-per-ton reduction from January buys.
Lisa Gordon, Pittsburgh, contributed to this story.