NEW ORLEANS Midwest ferrous scrap prices were once again dragged down by a relatively weak market for shred as prices for September fell as much as 3 percent compared with August.
Market participants said prices for cut grades such as heavy melt and prime grades such as No. 1 busheling were forced to follow declines in shred prices to maintain differentials between the grades.
From trading almost at par with each other to establishing a $40-per-ton spread in just a few months, busheling and shred have recorded unique moves in the past few months.
Sources said shred continues to be oversupplied in many parts of the Midwest due to better late-summer collections, which meant mills were guaranteed to press for lower shred prices this month.
Detroit-area mills set the ball rolling with prices down between $10 and $15 per gross ton from August, and within days mills in neighboring Midwest markets completed their buying programs closer to the down-$10 mark, according to sources.
Dealers that accepted the initial down-$10 offers said they were relieved because scrap that traded later in the week apparently lost a little more ground, slipping as much as $15 per ton under August levels on some grades, sources said.
With the bulk of trading completed in the region, AMMs Midwest Ferrous Scrap Index for shred settled at $356.99 per ton Sept. 10, down 3.2 percent from $368.85 a month earlier.
Obsolete grades that are increasingly making their way to the shredder were apparently forced to ape the move, which becaome evident once markets settled. Not surprisingly, AMMs Midwest Ferrous Scrap Index for No. 1 heavy melt settled at $342.51 per ton, down 3.3 percent from $354.18 on Aug. 12.
Although pre-trading speculation pegged busheling to trade sideways in September, the fall in obsolete scrap prices and shred weighed heavily on primes and forced tags lower, according to sources.
"The down $10 to $15 offers from mills for shred and even $15 in some cases came as no surprise to anyone," one Midwest dealer said. "We were all anxious to see what would happen to the other grades because the spread between busheling and shred was already so wide. It wasnt ideal (for prime prices to drop), but it had to happen."
AMMs Midwest Ferrous Scrap Index for No. 1 busheling settled at $400.07 per ton Sept. 10, down 2.4 percent from $409.95.