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Ferrous scrap bucks weak pricing trend

Keywords: Tags  iron and steel scrap, steel mill products, copper scrap, copper and brass, aluminum, producer price index, PPI, Michael Montgomery IHS Global Insight

CHICAGO — Iron and steel scrap went against the trend of weak metal pricing in December, according to the latest producer price index (PPI) report from the U.S. Bureau of Labor Statistics.

The PPI for iron and steel scrap jumped to 575.5 in December, up 5.9 percent from the previous month and 8.2 percent higher than in December 2012. Last month’s index for steel mill products rose just 0.3 percent from November to 196.4 but was down 1 percent from a year earlier.

The price index for copper and brass mill shapes was put at 408.1, up 1 percent month over month but down 6.1 percent from December 2012. The PPI for copper-based scrap of 568.9 was flat compared with November and down 6.2 percent year over year.

The aluminum scrap index declined to 215.7, down 0.6 percent from November and 11.1 percent from December 2012.

"The quiet on the producer price front is clearly reflected in the changes over the past 12 months," Michael Montgomery, U.S. economist for IHS Global Insight, Lexington, Mass., said in a written statement. Core finished goods prices rose 1.4 percent compared with a year earlier vs. a 2.1-percent improvement in 2012 and 3 percent in 2011, he said. "The December 2013 gain matched 2010," Montgomery said.

"Thanks to weaker energy prices, the total index gain was leaner still (at 1.2 percent year over year) for its coolest performance since 2008, when the recession battered all commodities prices," he said.

"There is no reason to expect much stiffening up of price gains this year, but the recovery in Europe and China is a plus rather than a negative this year," Montgomery said, so the prognosis is for slightly larger—but still modest—gains.

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