NEW YORK Ferrous scrap prices in Chicago appear to be heading sideways for most grades except shredded for August after at least two mills in the area reportedly concluded a majority of their buying programs in the latter part of this past week.
The sudden entry of one Chicago-area mill July 31 caught most buyers and sellers by surprise, as the general expectation was that Midwest markets would trade in earnest starting Aug. 5.
However, an early and aggressive push by the mill for immediate deliveries of obsolete scrap grades like No. 1 heavy melt, as well as plate and structural scrap, at prices that were unchanged from July forced other mill buyers to start locking up some tons, market participants said.
At least one other producer had completed a majority of its purchases by Aug. 2 at prices that were mostly unchanged from July for most grades, barring shredded scrap.
It is still uncertain how shred will fare in Chicago this month, with buyers and sellers reporting a bid-offer range of $360 to $375 per gross ton, which is sideways to down $15 per ton from July levels.
The market is trading sideways on most grades because theres relative balance between supply and demand, one mill buyer in the region said. "Theres nothing really going on right now that will drive it one way or the other."
Though most sources called it a sideways market for all grades except shred, many buyers and sellers said prices for some cut grades like heavy melt had shed $1 or $2 per ton on the transactions concluded thus far.
"Trends seem to be sideways on primes (and) sideways to maybe down slightly on cut grades. Im hearing that shredded is being offered at down $10 to as much as $15. Seems to be a lot of shred out there and no shortage of primes, and mill demand overall is relatively stable. I think our market could be settled by early next week," a second Midwest buyer said.
In Detroit, only one mill has reportedly concluded the bulk of its buying with a late burst by other mill buyers late Aug. 2, ensuring that the market would settle by Aug. 5. In St. Louis and Indiana, some spot transactions were concluded by Aug. 2, several sources said, adding that they expect these markets to follow the trends being set in Chicago this month.
Looking east, a Youngstown mill reportedly traded sideways for all grades except shredded, which it managed to buy at a $20-per-ton discount to last month.
The move, partially driven by mills ready to pounce on any prime grades that they can get, has widened the margin between No. 1 busheling and shredded scrap to $55 per ton, with those products at $430 per ton and $375 per ton, respectively, according to some sources.
In the Southeast, some cut grades have traded at sideways numbers, while one mill managed to pick up the grades at prices that are slightly less than in July. Another steelmaker is actively in the market looking to replenish a weak scrap inventory as this market continues to develop, sources said.
While market consensus on sideways pricing for all grades except shred might hasten the time frame for making August deals, deliveries of scrap could be strained.
A rail car shortage and high Mississippi water levels are concerning, sources said.
"One of the reasons we were late shipping is we couldnt get the gondolas," one Pittsburgh source said, while a scrapyard owner said rains have made loading barges on the Mississippi difficult.
"Before, the waters were too low in Chicago and we could only half fill barges. Now that has cleared up and the high waters on the Mississippi are slowing us down," he said.
Lisa Gordon, Pittsburgh, contributed to this story.