NEW YORK Early
trading by a few Midwest steel mills eager to secure inventory
helped lift July ferrous scrap prices in Chicago and Detroit,
with prime scrap gaining more ground than obsolete (cut) grades
for the second consecutive month.
While a few mills in
Chicago started negotiations July 1, most mills in the Detroit
region completed a majority of their buying by July 2 to make
it the first city to settle, market participants told
One of the largest
mills in the area set the pace for scrap prices in Detroit,
entering the market with increases of $40 per gross ton for
prime scrap and up $25 for shredded and $30 for plate and
structural scrap compared with June levels.
Others were forced to
follow the increases, with most buyers and sellers reporting
that the Detroit market pretty much settled at those higher
Scrap prices in
Chicago didnt quite mirror Detroits movement, with
the prime grades rising $30 per ton vs. June while increases
for the obsolete grades ranged from $18 to $20 per ton,
according to several sources.
AMMs No. 1 busheling price in Chicago settled at
$410 per ton July 3, while shredded scrap gained $16 to settle
at $376 per ton.
Concerns about flows
of obsolete grades resulted in increases of $20 per ton for
5-foot plate and structural scrap and $18 per ton for No. 1
heavy melt as AMMs Chicago assessment for the
two grades settled at $373 and $353 per ton, respectively.
mills wrapped up a large percentage of their buying between
July 2 and 3, with a late push for additional volumes of plate
and structural scrap leaving about 5 percent of the total
monthly purchases pending for a few buyers, sources said.
Opinions differed on
the reasons for strengthening prices, with some suggesting
mills raised raw material prices to support previously
announced increases, some saying it was supply driven and
others indicating business at steel mills has improved.
A buyer for one
Midwest steel producer said aggressive numbers from a mill in
the Ohio Valley/western Pennsylvania region gave dealers
ammunition to chase higher prices.
"(That mill) really
played the market. And then Detroit came in really hard too.
Dealer offers for prime scrap were low on volume, so its
possible buyers maybe had a little trepidation," he said. "I
dont understand why this market went up, period. Had the
Ohio mills not done what they did late June, we would have had
a sideways market. Suppliers I spoke to were fine with sideways
a week ago. I dont think the fundamentals are there."
A Detroit-area market
participant said the increases were justified by the lack of
scrap at several dealer yards one week ago, while a second
source in the region said buyers likely felt the increases were
needed to cover their requirements for July and position
themselves for August.
In the Indiana market,
one dealer said a large producer had decided to wait a little
as it was anticipating a slight softening in the market during
the coming week. "They are obviously waiting for the market to
settle lower, and it might very well do that. With that being
the case, $410 on busheling ... might actually end up being too
high," he said.
Another Midwest dealer
felt the strategy had merit. "Flat-rolled mills have sort of
passed three price hikes through. (Two mills) jumped into the
market early at up $20, so I think they needed it up. I
dont think theres that much footing under the steel
price increases. The import boats are waiting to bring steel
in. They needed scrap to be up," he said.
However, one broker
offered another view. "(Companies) trying to say this
markets softening is rubbish. This market is getting
hotter and hotter. Youve got service centers that
dont have steel. Until we start seeing more imports and
service centers refill their inventory, the markets are going
to stay up," he said.
Indiana and Detroit, prime scrap showed its strongest
performance in Pittsburgh and the Ohio Valley as two mills
drove prices higher. Competition between the mills for No. 1
busheling pushed numbers to as high as $455 per ton in some
transactions, according to a few sources.
An outage at one Ohio
mill increased production for a sister mill in Pittsburgh,
which as much as $430 per ton on some deals vs. $382 in June,
sources said. Prices in Pittsburgh and Cleveland had yet to
settle July 3, although a local Cleveland mill paid as much as
$440 per ton to secure busheling as it builds inventory, they
"Between these two
mills, they are blowing out the prime market around here," a
supplier to one of the mills said.
The race for material
had a trickle-down effect in Youngstown, with prices paid for
busheling landing, for the most part, at $430 per ton.
Youngstown settled $20 per ton higher for shredded scrap, up
$35 for other cut grades and $45 for busheling.
In the Southeast,
negotiations were still under way as some mills in the
Carolinas paid increases of $20 per ton while other mills
remained absent. In Birmingham, the market remained active,
with some deals concluded at up $30 per ton on prime grades and
up $20 on shredded.
Pittsburgh, contributed to this story.