NEW YORK Uncertainty
about scrap prices in the coming months, reduced buying
programs by steel mills and a lack of clear signals from export
markets combined to send April ferrous scrap prices down $20
per gross ton in Detroit.
Market participants across the
United States said steel mills and scrap suppliers have begun
testing bids and offers in other steelmaking regions as well,
but the Detroit markettraditionally the first out of the
doorwas the only market to have settled as of April
Market sources in Chicago,
northwest Indiana and St. Louis said buyers in their markets
were aiming for the same $20-per-ton price drop, with some tons
traded as of late April 3.
In Detroit, mills pushed out
bids late April 2, most suppliers accepted the $20-per-ton drop
by the next morning and the dust had settled by lunch, sources
"The market definitely picked up
(April 2). In fact, many were surprised that we were even out
buying already. We took a very strong stance at down $20, and
once we were able to convince (one supplier) at down $20,
others fell in line," said a buyer at one Detroit area mill.
"Export markets are very weak, which has been a strong factor
in domestic market pricing."
Suppliers in the region said a
decline in demand from steel mills was another reason sellers
accepted the $20 drop after initially indicating they would
resist any cuts greater than $10 per ton.
Mill programs were off slightly
and inbounds are expected to decline as well with Aprils
price drop, according to a large dealer in the region.
"Suppliers are moving what is
expected to come in and possibly hold back some tons. (They)
just did not have many options this month. No one mill was
really pushing the envelope looking for scrap. Export (is)
relatively quiet and springboard deals were not as prevalent as
they were last month," he said.
A second supplier said the
resumption of scrap flow along northern sections of the
Mississippi River as ice melts released pent-up scrap,
contributing to more supply into the Midwest and consequently
to lower prices.
A third supplier confirmed that
demand from Detroit mills was lower this month, with supply
marginally better and business "acknowledged to be iffy going
forward with steel prices softening."
However, a source at a second
Detroit-area mill said supplier sentiment was more a factor
behind the price drop than any marginal dip in steel mill
activity. "The main reason (prices dropped $20) is that
suppliers dont have any confidence that pricing will be
higher in May," he said.
A sixth market source said mills
and foundries will have no problem filling orders in April at
down $20 but expressed concern about scrap flows. "It does not
mean scrap flows are better, but there is less demand. Up $40
(in March) didnt change the flow substantially last
month; down $20 will not change the flow dramatically either.
You have to wonder if the feedstock for shears and shredders is
out there in large tonnages," he said.
"I think the feeling is order
books look light, cash flow affects everyone and if you
dont move your tons, the next yard will," another source
in the region said. "No one feels 100-percent sure where the
market is headed. Take the $40 (price increase) from last
month, call it a belated gift and go forward."
Meanwhile, mills in Pittsburgh
and the Ohio Valley are expected to pick up less scrap this
month than in March as weakness in order books has prompted
some producers to run at lower capacity rates or perform
One Cleveland mill bought shred
at $390 per ton for April and expects to pick up the rest of
its needs at $20 down across the board, a source said. A second
mill reportedly finished its purchases at down $20 across the
In Pittsburgh, mills are
expected to mirror Cleveland, but it remains unclear where the
numbers will land as metal recyclers are not holding excessive
inventory, sources said. One mill expects prices to be down $20
per ton but a second mill buyer said he is holding off making
deals until he has more clarity.
"I expect the mills will try to
push it down some since there are some outages and they have
been posturing that they will buy less," a Pittsburgh scrap
supplier said. "Maybe theyll sell their steel at a
discount since the scrap price increase last month was the
excuse for them trying to raise steel prices."
In the Southeast, Birmingham,
Ala., players are expecting prices to settle down between $15
and $20 per ton. One Birmingham mill is making a full buy and
has entered the market, securing some shredded scrap and some
No. 1 busheling scrap at a $20 discount to March levels, but it
is still unclear where cut grades will settle.
A supplier to Birmingham mills
said that demand has not changed, and attributed the falling
prices to softer export activity and aggressive mill offers.
"Demand is basically the same. This is a reaction to weaker
export sales and one mill trying to take advantage of the
situation," he said.
In the Carolinas, one mill has
picked up the majority of its scrap at down $15 per ton. A
Carolina mill buyer said that business is not robust but is
stable and steady. A second Carolina producer had not picked up
its program for various mills but did exercise its end-of-month
cancellation rights for all orders that were not delivered by
Lisa Gordon, Pittsburgh,
contributed to this story.