NEW YORK Steady demand from steel mills and some supply-side concerns heightened by a snowstorm sent ferrous scrap prices in the Midwest nearly 10 percent higher on obsolete grades in March.
Market participants said flows of obsolete cut grades, such as heavy melt and plate and structural scrap, took a severe hit in February due to price drops at mills and bad weather conditions.
As trading for March began in earnest last week, dealers initially refused to budge from expectations of large increases, with offers ranging between $40 and $50 per gross ton higher from Februarys levels for obsolete and prime grades, sources said.
Mill buyers looked to secure scrap at around $20 per ton higher, sending the market into a stalemate. However, a large snowstorm that battered several parts of the Midwest was all scrap buyers needed to cede some ground (amm.com, March 6
In Detroit, dealers scored increases of $40 per ton across all grades, with at least one larger dealer claiming negotiations had been fair because he had expected an increase of at least $50 per ton.
Detroit was hit the worst in February, and we were hoping to recover fully from that, he said.
A day later, mills in Chicago, northwest Indiana and St. Louis raised their bids to come closer to dealer expectations.
Buyers and sellers agreed to relatively lower increases on cut grades despite supply being tighter than that of prime scrap as the market looked to reinstate higher values for the better yields provided by prompt industrial scrap, known in the market as prime scrap.
In Chicago and northwest Indiana, cut grades eventually traded between $30 and $35 per ton above February levels, while the St. Louis region traded at increases up to $5 per ton below that range.
Those regions repeated a similar trend in prime scrap as Chicago and northwest Indiana traded at $40 to $45 per ton above prior-month levels, while St. Louis traded at up $40 per ton, for the most part.
For the overall Midwest region, No. 1 busheling scrap emerged as the strongest grade in March, leading AMMs Midwest Ferrous Scrap Index
for No. 1 busheling to settle March 11 at $417.26 per gross ton, up 11.2 percent from Februarys $375.24-per-ton level.
Large tonnages purchased by two producers closer to Chicago at the high end of Marchs price range on No. 1 busheling lifted the overall region just more than $40 per ton, despite other locations trading at $40-per-ton increases.
For the first time since August, shredded scrap prices moved to a spread of more than $5 per ton with busheling as AMMs Midwest Ferrous Scrap Index
for shred settled March 11 at $411.17, up 9.7 percent from Februarys $374.93 level.
Heavy melt tags recorded a near-identical increase, with AMMs Midwest Ferrous Scrap Index
for No. 1 heavy melt settling March 11 at $380.69, up 9.7 percent from Februarys $347.14 level.