Search Copying and distributing are prohibited without permission of the publisher
Email a friend
  • To include more than one recipient, please separate each email address with a semi-colon ';', to a maximum of 5

  • By submitting this article to a friend we reserve the right to contact them regarding AMM subscriptions. Please ensure you have their consent before giving us their details.

Scrap tags strengthen as trading presses on

Keywords: Tags  steel scrap, ferrous scrap, busheling, prime scrap, shred, scrap, Midwest, Sean Davidson

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 May pricing.

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 markets—including the closely watched Chicago market—will settle June 7.

For a market that had earlier forecast a $10- to $20-a-ton slide in June pricing, this week’s 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 didn’t 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 May—a common practice when mills anticipate a weaker market.

"Little things happen that change perception," he said. "As a buyer, if you’re 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.

Have your say
  • All comments are subject to editorial review.
    All fields are compulsory.

Latest Pricing Trends