NEW YORK Midwest ferrous scrap prices dropped about 5 percent in May as sellers had little room to prop up prices on cues of weak domestic and export demand.
The monthly scrap dance began early this month, with steel mill buyers in the Detroit region stepping into the market on the first day of May and settling prices at mostly down $20 per gross ton across all grades (amm.com, May 1).
Detroits unexpected move in what had already been dubbed a down market set the tone for nearby St. Louis and Chicago to begin negotiations. By May 3, a majority of the tons in the Midwest scrap market had traded at close to down $20 numbers, with only some smaller tonnage deals left to be wrapped up.
Mill buyers said they were content bidding for scrap at $20 below Aprils price levels since the market had already talked itself down.
"The speculation leading into buying week was that the market would drop $15 to $20. Suppliers had already talked it down and though there was room to take it down some more we were happy with down-$20 prices," said one mill buyer.
Most scrap suppliers said they were relieved to receive mill bids at down $20 since many feared the drops could have been more severe.
"Chicago and Indiana consumers tried to buy early at down $40 but had no takers based on low yard inventories and reduced flows. The mills that came out early at down $20 are full," said one seller.
Market participants in Chicago and Indiana reported only some deviations from the down-$20 trend based on renegotiations of price following better visibility on previous months final price levels.
The slight deviations did little to impact the overall price trends in the Midwest, however, and AMMs Midwest Ferrous Scrap Index for No. 1 busheling settled May 10 at $377.31 per gross ton, down $19.84 and 5 percent from $397.15 per ton in April.
Meanwhile, AMMs Midwest Ferrous Scrap Index for shredded scrap settled May 10 at $367.84 per ton, down $21.05 (5.4 percent) from $388.89 in April, and AMMs Midwest Ferrous Scrap Index for No. 1 heavy melt settled May 10 at $339.85 per ton, down $19.74 (5.5 percent) from $359.59 in April.
The market is now debating whether Mays pricing reflects a floor, but many said it was still too early to tell.
"Everybody has got short lead times (and) everybodys dropping steel prices now so steel buyers are not going to want to buy steel. So unless theres some real consumption, theres not going to be any support (for scrap). Im not sure whats out there thats going to suddenly be good news," said one supplier.