NEW YORK Obsolete ferrous
scrap prices strengthened in the second tranche of trading in
key Midwest regions as an apparent demand spike encouraged
scrap dealers to hold out for better pricing.
Market participants said prime
grades mostly continued to trade at prices unchanged from May,
with some uptick to the east of Chicago and Indiana, while
obsolete grades that traded at down $10 per gross ton during
the start of the week strengthened June 6 to trade sideways at
Sources said final prices had
yet to be fixed on several trades in Chicago and Indiana as of
late June 6. As a result, the expectation is that most
remaining marketsincluding the closely watched Chicago
marketwill settle June 7.
For a market that had earlier
forecast a $10- to $20-a-ton slide in June pricing, this
weeks trading has thrilled suppliers who are now
suggesting that the market has bottomed.
Opinions were divided, however,
as to what caused the apparent turnaround.
According to one market source,
mill order books for finished steel products improved in May,
increasing their need for scrap material.
"Order books got better but
consumers didnt tell anyone. Mills used more scrap in May
than they planned and their inventories were reduced for June.
This strengthening was not supply-driven; it was driven by
demand," he said.
A second source said dealers
caught wind of a stronger market after mills failed to cancel
scrap orders at the end of Maya common practice when
mills anticipate a weaker market.
"Little things happen that
change perception," he said. "As a buyer, if youre going
to buy down, you should just come out and buy down and cancel
scrap at the end of the month. And there was a little concern
over prime availability. Prime supply was down because mills
were buying more prime scrap due to the narrow price
differential to shred and plate and structural scrap, which
mills should do," he said.
Sources said most mills have
completed securing a majority of their tons with only final
prices left to thrash out, thought at least one broker said he
believed some mills have not been able to secure their needs
and are still in the market offering sideways pricing.
Several mill buyers refuted that
claim, however, with one buyer saying additional purchases at
May pricing were a good bet for July.
"I think supply and demand are
tightly matched right now, so laying down a little inventory is
essentially a hedge against a mill having a stronger July
program or export coming back. Plus, east of Chicago got more
strength as the trade went on, so that could be a factor come
July," the buyer said.
Trade also continued outside of
the Midwest. In Pittsburgh, most mills were still in
negotiations at of June 6, but sources said they largely expect
the market to trend sideways across all grades.
The tightness in the prime scrap
supply made its way into the Youngstown, Ohio, market as well,
with the price for No. 1 busheling improving $5 a ton to $385 a
ton. No. 1 heavy melt remained unchanged at $325 a ton, while
some other obsolete grades fell by $5 per ton.
Further north in Cleveland, the
market was still unsettled by late June 6, though the
speculation is that prices could hold flat.
In Ontario, the price for prime
scrap increased $5 per ton and other grades fell by $5 per ton.
Ontario mills needed to pay up on prime prices as the material
could be rerouted and sold into the United States for higher
numbers, sources said.
In the southeast, Birmingham,
Ala., appears to be headed sideways, while it was still unclear
whether the Carolinas will follow suit.
Lisa Gordon, Pittsburgh,
contributed to this story.