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Shredded leads the way as Midwest settles

Keywords: Tags  ferrous scrap, steel scrap, Midwest scrap, heavy melt, shred, busheling, Sean Davidson

NEW YORK — Shredded scrap has emerged as January’s strongest scrap grade in the Midwest, followed closely by heavy melt and plate and structural scrap, as supply concerns offered obsolete grades more support than industrial scrap.

Market participants across the region concluded this month’s trading programs Jan. 10 with heavy melt and plate and structural rising $20 per gross ton in Chicago.

AMM’s January assessment for No. 1 heavy melt in Chicago settled at $420 per ton and 5-foot plate and structural plate was $434 per ton, both up $20 from December levels, while AMM’s January assessment for shredded scrap finished at $438 per ton, up $23 from December.

Assessment prices for prime grades such as No. 1 busheling and No. 1 bundles finished at $440 and $433 per ton, respectively, both up $10 from December. Prime scrap prices lost ground over the course of the past week, sources said, with several early sales reported at increases of as much as $15 from December but late sales gaining $7 or less on some small volumes.

Market participants said the situation was graver for those with unsold prime scrap as some reported seller offers at down $10 to $15 to mills outside the Midwest.

AMM’s monthly Midwest Ferrous Scrap Index for No. 1 busheling settled Jan. 10 at $444.86 per ton, up 1.9 percent from $436.37 in December. AMM’s Midwest Ferrous Scrap Index for shredded scrap settled at $438.92 per ton, up 5.8 percent from $414.92 in the same comparison.

A poor month for prime scrap resulted in a $15-per-ton erosion between prices of busheling and shredded scrap—the differential shrank to just under $6 per ton this month from $21.45 in December.

One market participant said the current differential and late weakening in prime scrap prices could encourage mill buyers to secure more prime scrap should obsolete scrap supply concerns continue.

Although shredded and heavy melt recorded double-digit increases, several suppliers expressed disappointment at the failure of obsolete scrap to achieve increases of $30 to $40 per ton this month.

Some mill buyers, however, felt that obsolete scrap prices are outpacing finished steel prices.

"The big increases of $30 and $40 didn’t happen because if you look at the prices increases in the last three months, it has gone up too much in my opinion," a buyer for one large producer said. "Flat carbon prices certainly haven’t kept up with the price increases in scrap over the past three months, and long carbon is even tighter."

The lack of any early eagerness for scrap by several large buyers, dismal exports and the unclogging of transportation lines holding scrap booked in previous months were some factors that helped buyers temper larger expectations.

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