NEW YORK Midwest ferrous scrap trades beat market sentiment for October and avoided another month of declining prices as dealers stayed firm to ward off any downward pressure.
Despite initial speculation and rhetoric that scrap prices would fall anywhere between $10 and $20 per gross ton this month, dealers fought against the tide when many noticed that steel mills did not cancel unfilled orders toward the end of September, market participants said.
"Mill buyers and mill-owned scrap companies or their exclusive brokers can talk the market down all they want. But if they dont cancel orders when they expect prices to drop thats the first sign that demand is better than we thought," said one Midwest dealer. "We were hearing all this talk and some people did sell some tons at down money, but when the mills finally came in they had heard the same thing from most scrap dealers: that dealers would not sell below September prices and if mills did force a drop, dealers would hold back supply for the winter months when prices always rise."
His assessment summed up the mood across the Midwest, and mills reportedly were quick to respond. In Detroit and St. Louis, most major grades traded at prices unchanged from September, but things developed a bit differently in Indiana and Chicago.
"The first sale was your worst sale. We sold some scrap at down $10 on Sept. 30 and then had to watch as most of the market firmed to sideways. Your last sale was your best sale this month," a second dealer said.
A third source said that the real surprise came late Oct. 3, when the market was flooded by reports of No. 1 heavy melt and shred selling at prices above those recorded in September.
"That was an absolute shock to us," he said. "We expected a sideways market and fought for it. But to see shred and heavy melt prices go over, that was a real surprise. Two mills in Chicago were really chasing scrap."
In the overall market, though, the impact of the tons that sold late was minimal, with heavy melt marginally outperforming the other grades.
AMMs monthly Midwest Ferrous Scrap Index for No. 1 heavy melt settled Oct. 10 at $345.93 per gross ton, up 1 percent from $342.51 a month earlier.
No. 1 busheling and shred were unable to match that gain.
AMMs Midwest Ferrous Scrap Index for No. 1 busheling settled Oct. 10 at $401.16 per ton, up 0.3 percent from $400.07 in September, while the AMM Midwest Ferrous Scrap Index for shred settled at $358.10 per ton, also up 0.3 percent from $356.99 in the same comparison.