NEW YORK A late
strengthening in obsolete scrap prices triggered by a rush to
secure heavy melt and plate and structural scrap has worked to
the advantage of steel mills that started their buying programs
earlier this past week.
Market participants said a
majority of the tons in Chicago traded earlier and at lower
prices than at mills in Indiana, which were forced to chase
obsolete scrap with more aggressive pricing.
As a result, obsolete grades in
Chicago settled between $6 and $8 per gross ton lower this
month vs. May, while mills in Indiana have averaged anywhere
between sideways pricing to down $5 on their total buys for
June, depending on grade and last months price level.
Prime scrap, meanwhile, traded
sideways in both regions compared with May, sources said,
leaving AMMs No. 1 busheling price in Chicago
unchanged at $380 per ton.
In Chicago, several steel mills
traded early and secured obsolete grades like No. 1 heavy melt
and plate and structural scrap at $10 per tonne below last
months levels, but the late entry of two consumers meant
final averages for the market trended differently as later buys
were concluded at higher prices.
June assessment for No. 1 heavy melt in Chicago finished at
$335 per ton, down $6 from May. Sources said No. 1 heavy melt
traded in a wide range of $327 to $340 to Chicago mills.
Chicago mills were able to
secure better prices on plate and structural scrap than their
Indiana counterparts as large volumes bought early took the
overall assessment price in Chicago down $7 to $353 per ton,
with Indiana averaging a few dollars higher.
Better availability of shredded
scrap made it the weakest of the three grades, as it shed $8
per ton in Chicago to $360 per ton.
Indiana market participants
reported several trades at prices well above the Chicago
assessments, with several tons reportedly traded at numbers
unchanged from May levels. In Indiana, it appears that plate
and structural scrap was the hardest to come by, followed by
heavy melt and then shred, several sources said.
One source said that mills in
that region looking to secure some late tons will have to pay
prices above May levels as dealers look to take advantage of
the strengthening market.
"We definitely came out of the
gate buying at sideways on prime scrap and down $10 on all
obsolete grades. However, within a day of trading, we quickly
started seeing dealers taking a firm stance and holding for
sideways on their obsolete grades," he said.
While this buyers overall
purchase finished a few dollars below May levels, he said that
but by late Wednesday not one dealer was willing to sell
obsolete scrap at lower prices. "To purchase any scrap today,
we would be paying up money from Mays levels," he
A second source said that steel
mills willingness to keep prime scrap prices unchanged
didnt bode well for large drops on obsolete grades.
"I think that the mills
desire to buy cheaper scrap was tempered by the early
determination that prime was selling at sideways. Ten days ago
the consensus was for obsolete to be down $20. That was not
possible after the prime sideways talk," he said, also
attributing some of the price strengthening to mills
realignment of prices to some sellers who had over the months
lost some ground on price value.
"I really think that most of the
better sales might have been more price adjustments than
anything," he said.
A third source attributed the
rapid strengthening in obsolete prices to supply-side concerns.
"People misjudged the scrap flow into dealer yards. Three
months in (a) row of down money has a way of impacting obsolete
scrap supply," he said.
However, he cautioned against
too much optimism. "The short-term perception is that
weve hit a short-term bottom. We just dont see a
robust economy going forward. The fundamentals that were
driving prices down havent really changed that much," he