Early scrap sales at the start of the new year could bring
another robust month for obsolete grades, while the outlook
doesnt bode as well for prime grades due to ample
One shredder reported
a sale into an Ohio mill at $440 to $455 per gross ton, up $20
to $25 from December levels, while another shredder said he
unloaded a large quantity into the Midwest at a $15 to $20
Scrap dealers are also
shipping material out on a to-be-determined basis to
accommodate mills that ended the calendar year with low
inventories on the ground. Dealers dont always agree to
sell for an unspecified price in an up market but are doing so
because they are confident of its strength.
The market is expected
to kick into high gear Jan. 6, with demand stronger than it has
been for months.
"Many mills took time
out in the last couple months of the year, but it looks like
all the mills are in for a healthy buy this month," one
Pennsylvania scrap processor told AMM.
With all mills looking
for scrap at the same time, coupled with low inventories at
most mills, January is expected to be a sellers
"I think the shred and
cuts will be up $20 to $25 on low supply in the Midwest. Primes
are still the wild card," one broker representing a group of
No prime deals have
been reported, but busheling and bundles arent expected
to perform as well as the shredded and cut scrap grades. The
spread between shredded and prime has been quickly evaporating,
narrowing to $14 per ton in December from $45 per ton
previously, with the trend expected to continue (
amm.com, Dec. 24).
The narrowing of the
spread is a combination of strong manufacturing activity and
tight levels of obsolete scrap. Two Ohio mills are in the
market for obsolete scrap, but with small or limited buys of
To take advantage of
the tight obsolete grade scenario, some cut grades could be
sourced from exporters who are hoping to sell scrap into the
domestic market in a quiet export arena. Due to quality and
size issues associated with export-grade material, exporters
could find homes for their material at rebar mills.
"With scrap in short
supply, the exporters may come inland even though the quality
is not the best," one source in Philadelphia said.
The recent weather is
"There was virtually
no flow on obsolete scrap into the yards in December due to
weather, and it looks like the same is going to happen in
January. I do not think the mills can buy all their melts for
January and get them shipped due to (inclement) weather and
lack of flow. I think we are now in a 60-day market on firm
prices going forward," one shredder source in Birmingham, Ala.,
An Ohio Valley source
agreed that this market could have some strength to it. "In
light of the January weather, and weak inventories to begin
with, I expect mills will come up short heading into February,"