At first glance, it
might seem as if nothing notable has happened in the world of
ferrous scrap over the past 12 months. Heading toward the 7th
annual AMM Steel Scrap Conference in Chicago at the
end of October, scrap prices are near where they were a year
Prime grades in
mid-September were slightly above where they stood a year
earlierAMMs No. 1 busheling composite price was
about $2 per ton higher--although cut grades havent fared
quite as well, with No. 1 heavy melt and shredded down.
But that doesnt
tell the whole story. Scrap prices during the past year have
experienced periods of volatility punctuated by stretches of
calm. Here in elemental terms is the more or less monthly
pattern from October 2012 to this September:
While 2011 was mostly
calm--six months essentially were sideways and prices changed
very little from January to December--and 2012 was extremely
volatile (no months were sideways), 2013 has taken a bit from
each of those years, making it difficult to anticipate monthly
At the 6th annual
AMM Steel Scrap Conference in Philadelphia last
November, a North American economy that had difficulty gaining
traction was a major topic of conversation. The same was still
holding true five months later at the Institute of Scrap
Recycling Industries annual convention and exposition in
Orlando, Fla., where scrap iron and steel dealers, brokers and
buyers werent overly optimistic about their sector
through the summer, with buyers reporting weak order books
through July. Its going to be a long, hot
summer, one buyer said.
Not much about the
economy has cleared up since those two major scrap meetings.
Unemployment is creeping down, but slowly. The federal budget
and debt ceiling are still political footballs. The
sequestration has cut seriously into all federal spending, with
a subsequent decline in demand for metals.
Some things within the
ferrous scrap economy itself arent much more encouraging.
The big story has been the continuing drop in export tonnage.
Additionally, mill demand for ferrous scrap is on pace to total
about 44.6 millions tonnes this year, which would be down more
than 10 percent vs. 2012. Furthermore, the nearly universally
acknowledged auto shredder overcapacity may mean either harder
hits to the price of shredded scrap or, conversely, a drop in
the price of prime grades.
But there are some
good signs. Auto sales remain strong, housing sales and
construction are showing signs of recovery and consumers are
spending again. All of these factors and more are sure to get
continued scrutiny at the upcoming AMM Steel Scrap