NEW YORK Midwest ferrous scrap prices outperformed pre-trading speculation this month as late cues from steel mills offered glimpses of a better market.
Scrap dealers received their first indication that prices wouldnt tumble the full $10 or $20 per ton previously anticipated when several Midwest mills opted not to cancel unfilled orders at the end of May. Cancellation of remaining orders toward the end of a month is common practice for mill buyers who expect to aim for much lower prices the following month.
One Midwest mill buyer said his mill did not cancel orders due to a decision to build inventory and better prepare for July. "I didnt cancel orders. I let dealers know I wasnt anticipating a significantly weaker market and made it easy to fill inventory by not canceling orders. Now I dont have to stretch to build inventory for July, which historically is a tighter month for prime scrap. And you need enough scrap on the ground to take you past the July 4 holiday," he said.
Through May, it became clear to market participants that at least two mills in the Ohio Valley region would aggressively chase prime scrap, and with an aim to secure their needs Midwest mills stepped into the market before their eastern counterparts at bidding levels mostly unchanged from May.
Midwest mill buyers said concerns that prime scrap was leaving their region for better prices in the South or East was the primary reason they moved early to let prices for No. 1 busheling and No. 1 bundles trend sideways, sources said.
Some buyers, however, said they lowered their No. 1 busheling intake and raised their shredded scrap intake in June as a growing price differential between the two grades made shredded increasingly attractive.
As a result, AMMs Midwest Ferrous Scrap Index for No. 1 busheling settled June 10 at $377.37 per gross ton, up just 6 cents from May.
Meanwhile, mill buyers successfully widened the price spread between No. 1 busheling and shred after an outpouring of shredded scrap offers defused any supply concerns.
Depending on the city and region, Midwest market participants said the price spread between the two grades had widened after trading for several months at or near the same price value and at about a $10-per-ton differential in May.
With AMMs Midwest Ferrous Scrap Index for shredded scrap settling June 10 at $361.38 per gross tondown 1.8 percent from $367.84 in Maythe gap between that grade and No. 1 busheling prices has now grown to $16 per ton.
During the trading week, obsolete grades of scrap, including shred and No. 1 heavy melt, traded about $10 lower than the previous months levels. However, a quick turnaround in sentiment fueled by larger mill appetites for obsolete scrap saw tags improve slightly as time passed. When the dust had settled, some mills in Chicago and most mills in Detroit had largely succeeded in securing obsolete scrap at down $10 from May, while others in the Midwest managed only modest decreases of down $3 to $5 per ton on their total buying programs.
Consequently AMMs Midwest Ferrous Scrap Index for No. 1 heavy melt settled June 10 at $335.17 per gross ton, down 1.4 percent from $339.85 in May.
East Coast export prices for heavy melt mirrored the trend as AMMs East Coast Ferrous Scrap Export Index for an 80/20 mix of No. 1 and No. 2 heavy melt settled June 10 at $313.84 per tonne f.o.b. New York, down 1.5 percent from $318.49 the previous week.