ORLANDO, Fla. Midwest
ferrous scrap prices shed at least $20 per gross ton across all
grades in April as mill buyers fought off dealer resistance
amid lower overall demand, improving scrap flows and an
apprehensive outlook, pushing down AMMs
Midwest Ferrous Scrap Index by about 5 percent, depending
on the grade.
Market participants in Detroit
were the first to agree to a down-$20 price move for April,
setting the tone for St. Louis, Chicago and northwest Indiana,
which followed shortly after (
amm.com, April 4).
While suppliers in the St. Louis
region agreed to a firm $20-per-ton reduction, trades in
Chicago and northwest Indiana were reported anywhere between
down $20 and down $22 in early trading and as much as down $25
in wrap-up deals towards the end of the trading window,
although sources said a majority of the volume traded closer to
the down-$20 level set in other Midwest cities.
Demand for scrap from several
mills was down anywhere between 10 and 20 percent for April,
according to market participants spread across the region, with
many citing struggling order books in certain steel sectors for
the reduced demand.
Market speculation through the
third week of March had signaled weaker scrap price trends for
April, with dealers initially indicating they would fight to
stop prices from sliding more than $10 per ton below March
levels and mill buyers indicating they would push for a
$20-per-ton drop (
amm.com, March 14).
By the third day of April,
however, it became clear that dealers had decided to bow to
mill demands after initial resistance was completely shut down
by mill buyers. According to one broker, mill buyers refused to
cede any ground because the general feeling was dealers won the
March round when they sent scrap tags up between $30 and $40
per ton, depending on grade and location (
amm.com, March 11).
"Initially, there was lot of
back and forth, but by mid-afternoon on April 3 things really
started after (dealers) gave in," one mill buyer said. "We have
a reasonable inventory position, business conditions are OK,
but nobody is setting the world on fire."
One Midwest dealer said that
most dealers probably feel prices are not likely to recover in
the near term. "I think the reality is they felt that
were not going to see a bounce back," he said. "They
looked at export numbers, a strengthening dollar and shortening
mill lead times, and that realization hit when mills came in at
down $20, plus demand was down less in the Midwestdown
about 15 percent in Chicago."
A second dealer said price
movements over the past few months appear to have been
influenced by a lot of rhetoric. "In March, when we were
trading, everybody had it in their head that it was going to be
up because of all the talk leading into the month. When the
markets being talked up, mills get it in their head and
then accept it," he said. "But its the same on the way
down. People like to say, the markets never
wrong; I like to say, Its wrong a
"Last month, it went up too much
and the fact is that we accepted it would come back down in
April. This is still a pretty healthy price, given business
levels. When the export news is as sad as its been, how
can you expect to go anywhere but down?" he added.
A third dealer said part of the
apprehension in the market stems from a fear that the
automotive sector is slipping. Additionally, with better scrap
flows in the spring, suppliers need to secure homes for their
scrap. "Prices going down over one day of trading from sales at
down $20 to some sales at down $25 is an interesting indicator.
It tells you mills are getting offered more than they need," he
Among the different scrap
grades, shredded scrap tags lost a little more ground to No. 1
busheling as the market attempts to restore a full $10 price
differential between the two grades.
Ferrous Scrap Index for No. 1 busheling settled April 10 at
$397.15 per gross ton, down 4.8 percent from $417.26 in March;
AMMs Midwest Ferrous Scrap Index for shredded
scrap settled at $388.89 per gross ton, down 5.4 percent from
$411.17 in the same comparison; and AMMs Midwest
Ferrous Scrap Index for No. 1 heavy melt settled at $359.59 per
gross ton, down 5.5 percent from $380.69.