Sustained weakness in fundamentals driving down the price of
shredded scrap pushed all ferrous scrap grades lower in the
Midwest as mills entered the market in earnest Sept. 5.
indicated that the Chicago market will finish stronger than
Detroit after mills in the latter region successfully drove
down prices further than originally expected. Although
pre-trading speculation pointed to Detroit finishing weaker
than other Midwest markets due to higher prices paid in early
summer, the expectation that shred would drop $10 per gross ton
in Septemberwith prime grades possibly moving
sidewaysfell far short of reality.
entered the market early Sept. 5 and quickly concluded the bulk
of their buying at prices down between $10 and $15 per ton on
shred, $10 on primes and between $5 and $15 on different cut
grades. Market participants said trend ranges varied depending
on where business was concluded last month.
After the dust had
settled, AMMs assessment for No. 1 heavy melt in
Detroit settled at $343 per ton for September while shred
settled at $354 per ton. Sources reported a wide trading range
of $345 to $360 per ton on shred, with larger volumes
reportedly at the higher end of the range.
Prime scrap grades No.
1 bundles and No. 1 busheling fell an even $10 per ton to $395
and $400 per ton, respectively, with machine shop turnings
reportedly trading at $260 per ton.
A buyer for one
producer said the big push for lower prices and dealers
apparent willingness to accept lower-than-speculated decreases
caught him by surprise. "I had a hard time understanding the
market. Of course, I am happy to be able to buy a lot lower
than the anticipated drops, but I couldnt figure out why
it was happening. To me, the pressure has to be coming from
outside the Detroit area," he said.
One Detroit-area scrap
dealer said the entire market was pulled down by an overhang of
shred. "My belief is this happened due to shred. Over the past
few months, the spread between shred and bush has increased
significantly and (I am) not sure it was the right thing for
that delta to get any larger," he said.
"There was no question
shred was coming down in September and it pushed down primes
and cuts with it. If not, heavy melt could have been (down)
more than shred. When shred fell, plate and structural had to
as well because the mills would have simply bought more shred
and not P&S (plate and structural)," he said.
Sept. 5 assessment for 5-foot P&S was $360 per ton, down
$12 from August.
Market participants in
Chicago and Indiana reported transactions at prices similar to
those recorded in Detroit and indicated that the market is
expected to settle Sept. 6.
In Philadelphia, scrap
grades moved in either direction as the only buyer of No. 1
heavy melt raised prices by $5 per ton to $320. "(The price) is
up $5 but he was low last month because of his outage," said a
dealer in the area. Meanwhile, shredded scrap trades were
reported at $345 to $355 per ton in Philadelphia, with 5-foot
P&S trading at $350 per ton, down $5 to $10 per ton from