NEW YORK Overall ferrous scrap demand in the Chicago region remained poor for the second straight month as two steel mills sought volumes significantly below their typical monthly averages.
The absence of heavy competition for grades such as No. 1 busheling and shredded scrap in Chicago meant that both grades dropped a full $20 per gross ton in March and continued to trade in almost identical price ranges, market participants said.
Trading for both No. 1 busheling and shred to Chicago-area mills was reported in range of $385 to $395 per ton, while AMM assessed both grades in Chicago at $388 per ton March 7.
Much like in February, several sources reported that several Chicago-area steel mills resorted to securing large volumes of industrial scrap on a price-to-be-determined basis, resulting in fewer spot market transactions for grades like No. 1 busheling.
One steel mill adopted a similar approach for most grades of scrap it consumes, sending several dealers to other mills and neighboring markets like Indiana for a better feel on price movement.
According to sources, conflicting views on price direction for tighter supplies of grades like No. 1 heavy melt resulted in two steel mills recording contrasting price movements, as one mill sent prices down $20 per ton while the other traded at prices that were sideways to down $5.
With heavy melt trading in an extremely wide range and insufficient visibility on the final volumes traded at different price points, AMM appraised No. 1 heavy melt prices in Chicago at $378 per ton March 7, down $10 from last month.
Meanwhile, plate and structural scrap traded closer to overall market trends and recorded drops of around $20 per ton. AMMs price assessment for 5-foot plate and structural scrap stood at $385 per ton March 7, down $18 from February.
Sources said neighboring mills in Indiana traded at prices that were about $5 to $10 per ton above price ranges recorded in the Chicago region, with many reporting that prices on cut grades grew stronger as the week progressed.
"On March 3 and 4, dealers sold scrap at down $20 and then the market turned on a dime. Dont ask me why," said one broker.
One dealer who secured strong prices on obsolete grades was disappointed that prime scrap prices fell $20 per ton. "Chicago is a disaster on prime right now with the river frozen, dump trailers impossible to find and rail cars weather beaten," he said.
A second broker said that unlike a month ago, when an oversupply of prime scrap sent all scrap prices down, this month a poorly supplied obsolete scrap market prevented prime scrap prices from falling any further than $20 per ton in the Midwest. "Busheling may have traded $5 higher in Chicago but the absence of (one producer) killed the market demand for that grade," he said.
Many dealers were surprised to have busheling, shred and plate and structural scrap trade in a similar price range and most were unable to explain why high-quality scrap like No. 1 busheling was trading at the same price level as obsolete scrap.
"It makes no sense. I dont know how mills can pay the same price for all of it. I guess it all depends on what the melt shop guys like, and they will give you a hundred reasons why buyers shouldnt attempt to change the mix," a second dealer said.