Market participants said several mill buyers secured large volumes from dealers on formula pricing and appeared content to let small volumes of spot trading determine pricing for the majority of their No. 1 busheling and No. 1 bundles requirements this month.
AMM was unable to reach a final assessment on prices for the two prime scrap grades, resulting in appraised values of $408 per gross ton for No. 1 busheling and $401 per ton for No. 1 bundles based on the thin volume of prime scrap transacted in the Chicago spot market. Both prices are down an appraised value of $32 per ton from January based on early sales of prime scrap.
As reports of prime scrap trades east and south of Chicago poured in at down $30 to $40, some sources felt prime scrap prices could fall a little further than $30 per ton in Chicago. However, most buyers and sellers opted for formulas as none could find common ground on spot pricing, sources said.
Meanwhile, AMMs assessment for obsolete grades, such as No. 1 heavy melt and plate and structural, finished at $390 and $403 per ton, respectively. Heavy melt dropped $30, while plate and structural dropped $31 from January assessments.
Despite some fear that shredded scrap prices in Chicago would follow neighboring areas and drop more than $30 per ton, sources said a majority of shredded scrap traded in Chicago in a range of $405 to $410 per ton, down $30 from January. AMMs February assessment for Chicago shred finished at $408 per ton Feb. 7.
Chicago sources reported a wide range of prices on most grades of scrap, with sellers saying they were forced to seek different homes for their scrap after one mill more or less sat out of the market while others lowered their intake from regular suppliers to take advantage of supply from the east.
"There seems to be a wider dispersion of buying prices for all commodities compared to recent months arising in part from the dislocation of scrap from the east and Canada, combined with no flows in the Midwest due to weather. It will be interesting to see how things develop over the next few months," one dealer said.
A second dealer said Februarys prices dropped across the country because exporters needed to push domestic prices lower to rekindle interest from overseas.
"Exporters wanted to drive the market low enough to the point that Turkey could buy, so they flooded the market from all coasts with cheap scrap. No flow in Chicago and its surrounding areas stopped prices from falling more than $30," he said.
A few dealers were gutted by the massive price drops in Chicago and neighboring Indiana mills, which sources said had managed to drop prices between $30 and $40 per ton.
"Mass brutality pretty much sums it up. Midwest markets, like the north, south and east markets, got destroyed. Markets really took on the tone of the export market, meaning numbers just kept getting worse. ... This is ugly," a third dealer said.
Some expressed surprise at "how quickly the floor fell out of the market," while other sources cried foul.
"Somebody out there is not speaking the truth. I would love to see pictures of all this scrap from overhead. This month shoots in the foot everything that makes supply and demand a part of the scrap metal business," a fourth dealer said.
"I guess a message to be learned from this is never to believe the phrase theres no scrap out there," a fifth source said.