NEW YORK Ferrous scrap prices in the Midwest soared to their highest levels since May 2012 as supply concerns caused buyers to accept sellers terms this month.
Early speculation leading into November had set the stage for increases of between $20 and $30 per gross ton from the previous months prices.
However, late October and early November attempts by mill buyers to secure scrap at increases of $20 per ton were immediately turned away by suppliers, who insisted on much higher increases for all grades of scrap.
After a brief impasse, most mill buyers in the Detroit region opened Novembers trading week with bids that were $30 per ton higher than the previous month. The $30 increase proved to be the sweet spot for suppliers, who responded favorably with no push for larger increases.
Despite sufficient supply of industrial scrap, market participants said apparent tightness in the supply of obsolete grades helped lift prices for all grades, including industrial and shredded scrap.
Mills in the St. Louis, Chicago and Indiana regions were quick to follow Detroits buyers, and within three days a large majority of ferrous scrap in the Midwest had traded at or near $30 increases.
For the few mills that stepped into the market a day after most Midwest mills had locked in their scrap tons, the market proved dearer.
As some mill buyers continued to build inventory for December after completing Novembers buying program, two producers who entered late last week to book scrap for November were greeted by seller offers $30 to $35 higher for grades like heavy melt, shred and plate and structural scrap.
Healthy demand from most mills in the region and the seasonal winter uptick in prices due to possible supply constraints brought on by cold weather resulted in the Midwest emerging as Novembers strongest market across the country.
Most market participants were undecided on whether strong demand from the mills was due to good order books or a play to book more scrap that can cover them for a week or more in December should suppliers push for another big increase.
"There doesnt seem to be any lack of demand in the Midwest. Its hard to tell whether thats due to real demand or a sense that the mills dont want to run short going into December," one supplier said.
AMMs Midwest Ferrous Scrap Index for No. 1 busheling settled Nov. 11 at $431.18 per ton, up $30.02 from $401.16 in October, while AMMs Midwest Ferrous Scrap Index for shred settled Nov. 11 at $389.01 per ton, up $30.91 from $358.10 in October.
Meanwhile, AMMs Midwest Ferrous Scrap Index for No. 1 heavy melt settled Nov. 11 at $373.69 per ton, an 8 percent increase over October.