NEW YORK Ferrous scrap
negotiations across the country hit an impasse Tuesday as
buyers and sellers failed to find common ground on price
increases for March.
In the bellwether markets of the
Midwest, market participants said many dealers in early talks
offered prime scrap at prices $40 per gross ton or more above
February levels, while most mills stood their ground with bids
at up $30 per ton.
A few low-volume trades were
reported in northwest Indiana Tuesday at up $40 per ton on
prime scrap, although there was no clear visibility on where
final prices would settle, sources said. Bids from mills in the
Chicago region reportedly were $10 lower than in northwest
Indiana for prime material.
Sources said obsolete grades of
scrap are not likely to achieve the same increases as prime
scrap this month as the market will attempt to return prime
scrap to yield-based premiums over cut grades.
"The mills are hinting at up $30
for shred, up $20 to $30 for cuts and up $40 for prime. We are
looking for up $40 to $50 across the board," one Midwest dealer
said. "I think we could get some of our consumers to pay up
$40, but we are not sure if that is enough."
The sentiment was echoed by
several other dealers in the region.
"(Dealers) are really pushing
the envelope," said one broker, noting that he thought the hype
was overblown. "Lets be clear, this market is way
over-heated for the demand that is out there. There is a reason
guys kept shipping in December and Januarythere is very
little confidence in steel as a core fundamental to our
business. Some consumers are pulling out of this market all
together. That may be the best move at the end of the day."
Several dealers contacted by
AMM said Tuesday they would hold off for better
offers, and mill buyers responded with an identical approach,
keeping most negotiations at a standstill.
"As I have responded to all the
guys trying to stir the pot in the Midwest and Detroit, I have
yet to see deals done at up $45 to $50. We would be a buyer at
up $30. Guys need to go home and let their steam out," said a
buyer for one producer. A buyer for a second mill called it a
"stalemate," while a third buyer said no mill wanted to be the
first to make a move.
But while some mills claim the
forecast market run-up appears to be overblown, Midwest dealers
contend supply dynamics are driving the market, citing a
snowstorm in the region this week as one reason for a bigger
Outside of the Midwest, early
indications also suggest a considerable rise in March prices,
In Ontario, for example, mills
are said to have strong buying programs this month, meaning
prices could be on the higher end compared with Chicago. "Mills
are in a quandary and they have no choice because all the mills
have pretty strong programs. Mills are not in a position to try
for less," said a broker selling into the Canadian market.
Scrap markets in the Ohio Valley
and the Southeast are still very much a moving target, but
early deals are up considerably over February prices, sources
said. The question is whether the first buyers into the ring
will pay the best price or whether the other mills will be able
to secure matching deals.
"Nobody wants to buy at the
wrong price and nobody wants to sell at the wrong price. It is
a Mexican standoff, and we are dragging our feet because we
dont know where it is going to end up yet," said a broker
in the Southeast.
Birmingham, Ala., also is still
very much unsettled but there are already two indications that
the market has strength, the Southeast broker said. "One
mills brokers are the first to downplay any market, and
they are not trying to play games this month. Another mill is
coming into the Southeast and trying to get their needs," he
In Cincinnati, one mill made a
decent sized buy at up $40 per ton on prime material and up $30
on cut grades and shredded scrap. Sources said they expect
other parts of Ohio to be up a minimum of $40 per ton, and
possibly as much as $50, but no deals have been made yet.
"Ive been offered up $45
(per ton) on primes but havent taken it yet. The mills
dinked around last month and didnt buy their needs. They
are trying not to act desperate, but they are. They are calling
suppliers in Canada and New York and offering special pay terms
to get their needs," said one industrial supplier to Ohio
Meanwhile, two Pittsburgh mills
entered the market up $40 per ton on prime grades, while some
plate and structural scrap has sold at up $30.
In the Northeast, sources said
early numbers put out by one producer point to an up-$15
market, while in Houston the trend could be similar, according
to a Texas dealer. Texan dealers outside Houston said they will
push for up $25 to $30.
Lisa Gordon, Pittsburgh,
contributed to this story.