NEW YORK Weaker overall demand from steel producers in the Chicago area adversely impacted monthly ferrous scrap prices, which trended lower as the week progressed.
As expected, prime scrap prices in Chicago finished the strongest in May, trading mostly sideways to April levels, while shredded scrap dropped an average of $15 per gross ton, according to market participants.
Obsolete or cut grades of scrap, such as heavy melt and plate and structural, dropped well below previously anticipated prices as late buying delivered weaker prices, buyers and sellers said.
AMMs No. 1 heavy melt price in Chicago was assessed at $371 per gross ton for May, down $14 from April, with trading reported in a range of $365 to $375 per ton on a delivered local mill basis.
Market participants reported a narrower range of $380 to $385 per ton for shredded scrap and 5-foot plate and structural scrap, with the latter dropping around $13 per ton.
The AMM assessment for No. 1 busheling in Chicago was $397 per ton, down $2 from April.
This months price declines on obsolete scrap surprised some dealers, who said movement on shredded scrap and busheling met their expectations as buyers were largely expected to return those two grades to a more typical price differential.
"I cant think of any month over a really long period of time when steel prices went upnot due to more demand, but because of less supplyand scrap went down," one Chicago-area dealer said.
A handful of mill outages across the country have resulted in longer lead times for some finished product, but also meant lower demand for scrap, according to several market players. Lower demand coupled with improved scrap flow amid warmer weather and a large overhang of shredded scrap in the Ohio Valley and Mid-Atlantic to weaken market fundamentals in key Midwest markets, they said.
Others offered a different take on the market. "Demand is soft in the Midwest," a second dealer said. "My opinion is the mills havent been running well and this has caused their scrap inventories to increase, so they want to get in better balance with where they presently are and what they see coming in the next couple of months."