NEW YORK The
price differential between No. 1 busheling and shred in the
Midwest nearly doubled this month following an aggressive push
by steel mills in the region for prime scrap coupled with a
more-than-sufficient supply of shred.
For the second
consecutive month prices for No. 1 busheling gained
significantly more ground than shred, returning the price
differential to historic levels of nearly $30 per gross
Mills in the Detroit
region once again this month were the first to conclude trading
at increases of $40 per ton for prime grades and between $20
and $30 higher for most cut grades and shred. This set the pace
for other Midwest markets, as mills in the Chicago, St. Louis
and Indiana regions opened the door to price negotiations while
tying up volumes on a price-to-be-determined basis.
When the dust had
settled, market participants said prime grades in all three
regions were up about $30 per ton over Junes levels, with
cut grades like No. 1 heavy melt gaining about $20 on average
and shred anywhere between $15 and $25 higher than June
Even a late push by
some Indiana mills to lower prime scrap tags did little to
change the overall increase, as
AMMs Midwest Ferrous Scrap Index for No. 1
busheling settled July 10 at $410.74 per gross ton, up 8.8
percent from $377.37 a month ago.
Heavy melt prices
outperformed shred in July, with AMMs Midwest
Ferrous Scrap Index for No. 1 heavy melt settling July 10 at
$356.07 per ton, up 6.2 percent from $335.17 in June.
scrap prices managed a relatively weaker 5.4-percent increase,
with AMMs Midwest Ferrous Scrap Index for shred
settling July 10 at $381.06 per ton vs. $361.38 last month.
As a result, the price
differential between No. 1 busheling and shred moved to $29.68
per ton in July from $15.99 a month ago. Sources said
Julys price differential between busheling and shred
reflected the historic spread between the two grades.
Prices for heavy melt
and shred benefited in July from the rush for prime grades
triggered by aggressive buying by a mill in Ohio at prices
significantly higher than those recorded in Indiana, Detroit
and Chicago, sources said.
"Busheling set the
market. It created a wave in the market. With busheling rising,
it pulled the other grades up. There were also more exports, so
supply was leaving the U.S. even if the export price
wasnt high. It all contributed to the increases," said
said demand from flat rolled steel producers remained strong in
July, and dealers said they did not record any meaningful
change in demand from rebar manufacturers.
Several sources said
mills in Indiana continued to pay prices well above those in
the Chicago area for heavy melt and shred, with Indiana mills
relying heavily on local supply.
"It seemed like
getting to deals there was like a tug-of-war that ended with
neither buyers nor sellers too happy about how transactions
came down," a second source said.
However, most dealers
said they offered no resistance to the increases announced
early July, with the only push-back coming when some buyers
tried to tie up late tons under the previously announced
A third source called
it a perplexing market as price movements for most months this
year have gone against historical trends and overall market
conditions. "Operating rates are going up and there is less
scrap out there to buy. And yet many dont feel the price
increases were justified from a finished steel demand and price
perspective. Today I raised the prices at a lot of our yards
and still nobody seems to think the prices will bring out more
scrap. The whole thing is so consistently inconsistent this
year," he said.