NEW YORK Shredded scrap prices in the Midwest posted a modest recovery in late trading as demand stayed strong for Junes weakest scrap grade.
Late buying by at least two large producers gave shredders an opportunity to claw back from early June decreases of $20 per gross ton in regions such as Detroit and Chicago, according to Midwest market participants.
With sellers wary that the $20-per-ton drop in shredded scrap prices would turn away suppliers, many were hesitant to confirm larger orders for shreda concern that some mill buyers said they shared and consequently helped alleviate by offering prices at down $10 to $15 per ton from May levels.
"The market seems to have bottomed out a bit. If I needed to buy additional tons of shred today, I would have to pay down $15 (per ton) or even $10 (per ton). Prices are back on demand. Demand chewed up tons that were available and shippers were scared to over commit," one mill buyer said.
Market participants said the late rebound in shredded prices meant mills in Indiana, St. Louis and Iowa secured shred at down $10 to $15 per ton from May levels, while mills in the Detroit and Chicago areas that were quicker bought shred at down $20 per ton.
Buyers and sellers said shredded scrap traded in a range of $365 to $375 per ton across the Midwest, with larger volumes trading within the lower half of that range.
As a result, AMMs Midwest Ferrous Scrap Index for shredded scrap settled June 10 at $368.47 per gross ton, down 4.1 percent from $384.13 per ton in May, while the index for No. 1 busheling settled at $397.96 per ton, down 0.04 percent from $398.15 per tonmore than doubling the price differential between busheling and shredded scrap values in a single month.
At a gap of nearly $30 per ton, some market participants feel shredded scrap prices could regain more lost ground in the coming weeks in order to prevent the price gap from widening too far.
Some buyers speculate prime scrap prices will hold onto June values as a strong auto sector is likely to keep auto scrap supply in balance.
"Historically, we would lose 30 to 40 percent of prime supply in July due to auto plant shutdowns. But I think this July supply will be down only 10 to 20 percent. I dont think auto shutdowns will be as prevalent as they were in the past," a second mill buyer said.
Among other major scrap grades, obsolete grades such as No. 1 heavy melt dropped as much as $10 per ton in Junes monthly trading as warmer weather has yet to deliver robust flows, suppliers said.
AMMs Midwest Ferrous Scrap Index for No. 1 heavy melt settled June 10 at $362.17 per gross ton, down 2.4 percent from $371.19 per ton in May.