NEW YORK March ferrous scrap trading across the Midwest stayed true to last months anticipation that prime scrap prices would fall further than obsolete grade prices.
However, dealer resistance born from anemic obsolete scrap flows into yards meant that final price movements were not as weak as prior speculation that prime scrap would drop as much as $30 per gross ton and obsolete grades at least $20 per ton.
Steel mill buyers who attempted to gauge dealer interest at the start of March found no takers for decreases of $30 per ton from February price levels for prime scrap like No. 1 busheling, but resistance withered on suggestions of down $20 per ton.
With that as their target, steel mills in the Detroit region once again were first out of the gate and worked quickly to wrap up the bulk of their purchases at prices that were $20 per ton lower than February levels for all grades of scrap.
Buyers in Chicago, Indiana and St. Louis followed a little later to attempt similar decreases, but recorded mixed results as sentiment improved and dealers pushed for better prices.
Market participants said that the late push from dealers meant that while most prime scrap sold at decreases of $20 per ton in areas like Chicago, trades in Indiana and St. Louis were reported in a range of down $10 to $20.
Obsolete grades like No. 1 heavy melt performed better, trading anywhere from sideways to down $20 per ton in regions like Chicago and Indiana and down $10 to $20 per ton in the St. Louis area.
Sources said supplier confidence turned after one major mill-owned broker bid strong prices for all grades of scrap in various key markets, which they saw as a cue that the "market had bottomed."
Mill demand for scrap varied by region, as areas like Detroit and Indiana stayed strong. In Chicago, market participants said overall volumes recorded a modest increase from February but were still significantly lower than typical monthly averages as two steel mills reportedly averaged only half their normal monthly purchases, up from a third in February.
With dealers holding their ground to prevent a price free-fall, the market recorded further erosion in the price differential between No. 1 busheling and shredded scrap.
AMMs Midwest Ferrous Scrap Index for No. 1 busheling settled March 10 at $391.68 per gross ton, down 4.3 percent from $409.09 in February, while the index for shred settled at $389.31 per ton, down 4.1 percent from $406.10.
With busheling offering a much better yield in furnaces, this implies that either the industrial grade is now undervalued or that shredded scrap is overvalued, sources said.
"I am not sure why mills still are buying cut grades but understand some are buying more busheling since they are having a difficult time getting enough cut grades. Destiny is one of the main reasons they prefer cut grades over busheling. Sometimes its hard to get melters to change the melt recipes," said one market participant.
Meanwhile, a tighter market for No. 1 heavy melt and the resulting reversal in trend through the course of this months trading meant that it delivered the strongest performance. AMMs Midwest Ferrous Scrap Index for No. 1 heavy melt settled March 10 at $373.91 per ton, down 3.1 percent from $385.86 in February.