Ferrous scrap trading in the Midwest picked up momentum late
afternoon Oct. 2 after steel mills in the Detroit region
entered the market with bids unchanged from a month ago on all
grades of scrap.
The late move quelled
any doubts about where prime grades would finish in Detroit
after the market had already ruled out any drops in the price
of obsolete grades and shred. Speculation leading into Oct. 2
varied greatly for prime scrap such as No. 1 busheling, which
some felt could have shed a few dollars.
However, the need to
secure supply prevented mills from shaving any prices, said a
source at a large Detroit-area dealer.
inventory levels are low across the board heading into
shortened holiday months and winter. Mill order books seem to
be holding firm going into the fourth quarter," he said.
Some mill buyers
reportedly felt that if scrap prices were pushed down this
month it would cost them that much more to get those volumes
back in November and December, which are short shipping months,
"I dont think
they are happy, but dealers are happier with sideways than
down, which was the indication the last couple weeks. Consumers
realized that down on primes would have made it very difficult
to buy the amount of scrap wanted in October," a second dealer
With a buying program
that tends to continue throughout the month as opposed to the
standard industry practice of securing scrap during the first
seven trading days of a month, one mill in the Detroit area has
reportedly secured scrap at prices that were down $5 to $10 on
shred, down $10 on primes and sideways on obsoletes,
AMM understands. It is still unclear how many tons
have traded at prices under September, but all mills in the
region are expected to complete their programs for this month
by Oct. 3.
Market participants in
Chicago and St. Louis said there is still uncertainty on how
prime grades will trend, but many reported that obsolete grades
and shred traded at sideways.
A buyer for one mill
said his aim was to buy all grades at sideways.
"Im trying to
buy anything I can at sideways. I probably have 75 percent of
the scrap I need secured but only a third of that has pricing
on it. So prices are still in a state of flux. People in
Chicago are holding back even at sideways, so it wouldnt
surprise me if Chicago ends at up a little," he said.
surprised if some are trying to push for more money," another
source said. "The direction of this markets momentum has
shifted upward. Thats upward from down $5 to $10. And I
hear the talk was down more than that ... for the last two
weeks of September. When the market doesnt do what the
mid-month talk would suggest, the momentum often
changes direction. I think thats what we have right now.
It will be interesting to see what the last trades of this
In Cincinnati, some
early deals were reportedly concluded at down $5 per ton for
shred and obsolete grades and down $10 for primes, but several
sources said the market firmed to sideways prices late
afternoon Oct. 2.
The Pittsburgh market
could see obsoletes and shredded scrap move sideways to down $5
a ton with most mills expected to be in the market for a
healthy buy, sources said.
In the southeast,
participants said the Alabama market is firming. After one mill
successfully picked up some scrap at a $10 discount to
September, similar deals evaporated. A second mill reportedly
entered the market Oct. 2 offering sideways prices on cut
grades, indicating a firmer market.
"No one is completing
orders on time because they dont have the supply here, so
except for prime this market could end up a solid sideways," a
Birmingham, Ala., source said.
Sources in Pittsburgh
and Alabama speculated that prime grades in both regions could
move down due to sufficient supply and a healthy price spread
Pittsburgh, contributed to this story.