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 Februarys levels. Just a day
earlier, buyers had attempted to hold their ground at up $30
while dealers sought increases of $40 or more from
"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
Scrap dealers maintain that
anemic flows are largely behind the bump, although at least one
broker questioned the fundamentals behind this months
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
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
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
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