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Stainless scrap prices up, margins thin

Keywords: Tags  stainles steel, stainless scrap prices, nickel prices, London Metal Exchange, LME, Rey Mashayekhi

NEW YORK — Stainless steel scrap mill buying prices continued to rise this month, with numerous industry participants saying that tightness in available material and escalating raw material costs have driven up the market and thinned margins.

AMM’s consumer buying price for Type 316 solids increased to $2,000 to $2,050 per gross ton from $1,950 to $2,000 at the end of December; 304 solids jumped to $1,525 to $1,590 per ton from $1,455 to $1,500 in the same comparison; and 304 turnings rose to $1,340 to $1,390 per ton from $1,270 to $1,320. Prices for 400-grade material increased by $10 per ton, with 430 bundles rising to $620 to $650 per ton and 409 bundles moving to $545 to $575 per ton.

Mill and processor sources confirmed the price increases, with most noting a prevailing tightness in material available for purchase on the spot market. Raw material costs also contributed to the climb, with London Metal Exchange nickel prices rallying in the wake of Indonesia’s ore export ban and the ferrous market also seeing gains in recent weeks.

The LME’s three-month nickel contract averaged $13,976.50 per tonne ($6.34 per pound) in December, up 1.3 percent from $13,798.57 per tonne ($6.26 per pound) in November.

"Consumer prices are rising in lieu of significant shortfalls in availability," one processor source told AMM, citing an influx in scrap consumption spurred by Outokumpu Stainless USA LLC’s stainless mill in Calvert, Ala. "It’s putting a lot of pressure (on the market)."

The increase in prices has not improved margins, however, with "processors buying at break-even and sometimes loss levels," the source said.

"The overall scrap market is tight, but the ability to squeeze the mills for more money is relatively nonexistent," a second processor source said. "I think we’ve probably reached a point of mutually assured destruction because (mills) can’t pay any more money and the flow of material won’t get better unless they pay more money."

"I think it’s still a battle," he added. "There’s a need for consumers to pay a bit more—and reluctance on their part. Even at the lower (price) levels, they’re barely breaking even."

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