NEW YORK 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.
"Mills realized 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, he said.
"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 said.
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.
"Im not 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 session are."
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 to shred.
Lisa Gordon, Pittsburgh, contributed to this story.