ST. LOUIS Midwest ferrous scrap prices plummeted this month as mill buyers welcomed a push by exporters to send domestic prices down.
With a strong dollar making bulk export transactions unviable to several countries, exporters were left with large volumes of unsold scrap despite winter weather reducing scrap flows, market participants said.
With Turkey staying away from U.S. shores by mid-January, it became clear that exporters would offer scrap inland. From the East Coast, shredded scrap was expected to make its way into the Ohio Valley region. From the Gulf Coast, Mississippi River mills were expected to be the benefactors. And from the West Coast, some sources expected scrap to make its way to the outer borders of the Midwest.
In addition, steady activity at manufacturing plants around the United States meant that prime scrap would take the biggest hit in February. When reports of an imminent onslaught of supply from an under-utilized Canadian prime scrap market made the rounds in late January, prime scrap such as No. 1 busheling was doomed, some sources said.
It all came together as trading began Feb. 5. Despite some dealerswho saw January scrap flows into their yards drop more than 50 percenthoping for some moderation in the inevitable price drop, reports of East Coast sales into Indiana and northern Ohio at depressed prices and the sheer volume of scrap on offer from exporters was all the ammunition Detroit-area mills needed to send prices crashing by $30 per gross ton on all grades (amm.com, Feb. 5).
"Towards the end of my buy there were people offering me shred and primes at down $40. It was a very weak market," one mill buyer said.
Over the following few days, mills in Chicago, Indiana and St. Louis started booking their obsolete grades at down $30 per ton as dealers finally caved in to buyer pressure. Shredded and prime scrap sales took a little longer as one major producer decided to sit out of the market in most regions by bidding for scrap at down $40, while several other millsunsure of just how much they could drive down prime scrap pricesdecided to wait it out (amm.com, Feb. 7).
Other mills picked up prime scrap at prices that were down $30 to $40 per ton, with prices getting weaker as the week progressed. Mills waiting to fix prices on prime scrap are expected to do so within the next few days, and most sources expect prices to largely finish within the above range.
AMMs Midwest Ferrous Scrap Index for No. 1 busheling settled Feb. 10 at $409.09 per gross ton, down 8 percent from $444.86 last month.
Weaker busheling prices meant further erosion between busheling and shredded scrap prices, which narrowed to $3 per ton as AMMs Midwest Ferrous Scrap Index for shredded scrap settled Feb. 10 at $406.10 per ton, down 7.5 percent from $438.92 in January.
AMMsMidwest Ferrous Scrap Index for No. 1 heavy melt settled Feb. 10 at $385.86 per ton, down 7.7 percent from $417.95 in the same comparison.