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Detroit mills cede ground, pay more for scrap

Keywords: Tags  ferrous scrap, scrap prices, Sean Davidson

NEW YORK — Steel mills in the Detroit region broke the deadlock with scrap sellers March 6 after conceding to supplier demands, settling prices and tons within hours of putting out firm bids at higher prices than they originally targeted.

Although a few mills in the overall Midwest region announced early March 6 that they would secure volumes off contract or on the basis of to-be-determined pricing, mills in Detroit opted for a different route: bids up $40 per gross ton from February’s levels. Just a day earlier, buyers had attempted to hold their ground at up $30 while dealers sought increases of $40 or more from February.

"The plus-$30 was only being pushed by one mill, which is light," said a source at one large supplier, noting that the final $40-per-ton increase helps bring Detroit prices back in line.

"Detroit came down $20 last month when surrounding areas were down $5 to $15. We should have been plus $45 to $50 to offset the differential. Demand is good," he said.

A buyer for one Detroit mill said he had little option but to concede to an up-$40 market after initial dealer offers ranged from $40 to $50 above February levels.

Scrap dealers maintain that anemic flows are largely behind the bump, although at least one broker questioned the fundamentals behind this month’s leap. "We believe a couple of heavyweight dealers tried to push to up $45. (Even) up $40 is too hot. If dealers put $30-plus on their yard buys, scrap will come out in my opinion," he said.

Other critical Midwest markets like Chicago, northwest Indiana and St. Louis also began trading in earnest March 6. Most mills were still trading late in the day, however, with sources suggesting these markets will settle March 7.

Market participants in those regions reported larger price increases for prime scrap grades, with cut grades and shredded scrap trending $5 to $10 under the apparent increases in prime tags.

A buyer for a steel producer in the Chicago/northwest Indiana region said he had completed his buying at up $50 per ton on No. 1 busheling and up $40 on shred, while a buyer for a second mill said his prices were up $40 per ton on No. 1 busheling.

At least one steel producer in the region reportedly is chasing prime tons with some aggressive prices, according to a few sources.

In Ontario, it still remains to be seen if mill buyers will have to follow the increases finalized in Detroit. Buyers and sellers were still $20 per ton apart in negotiations late March 6, with mills trying to go up $20 per ton and sellers seeking up $40.

The Pittsburgh and Ohio Valley markets started to show signs that trading was nearing a close by the end of the day March 6, but the bulk of trade remains unfinished as some mill buyers are still hesitant to pull the trigger.

In Pittsburgh and Cleveland, some mills picked up prime scrap at up $40 per ton and other grades at up $30. Shredded scrap deals were done at $410 per ton in both cities, a $35 improvement in Cleveland and a $30 increase in Pittsburgh.

"Mills are strapped for inventory and are forced to pay more," an Ohio shredder source said. "There are a lot of scrapyards that are already overpaying for scrap because they are still trying to finish February orders to the mills."

In Cincinnati, mills completed their programs at up $40 per ton on prime scrap and up $30 on other grades.

Youngstown, Ohio, meanwhile, remained quiet, with no indication at the end of the day where the market would settle.

The market also was moving at a slower pace in the Southeast.

In the Carolinas, one mill buyer reported securing his needs at up $10 to $15 per ton vs. February levels, a shredder source said he was able to sell to two mills at up $20 and a broker sold material at up $15.

In Birmingham, Ala., large scrap processors were holding out in hopes of getting up $30 per ton for prime scrap, while mills were trying to secure their needs at up $20 to $25. "The mill buyers have put up a wall and are trying to buy at January numbers. They are knocking the wind out of our sails," said a Southeast shredder source. Other major scrap processors were optimistic they will prevail and sell their prime to mills at up $30 per ton and other grades at up $20.

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