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
As a result,
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.
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.
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
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