Automotive shredders in the United States aggressively raised prices for feedstock in order to continue attracting material into their yards following January’s healthy increase in finished shredded scrap prices.
"A lot of shredders cleared their decks in the January trade. Anyone who wants to buy mid-month will find it hard to find material," an Ohio Valley shredder source said.
Prices for shredded scrap are up by $80-90 per gross ton from October levels, which motivated dealers to seize the opportunity and sell as many tons as they could this month.
The Ohio Valley shredder source said some brokers offered more than the usual amount of shredded scrap to the mills during the recent settlement and this created a perception that the market may be oversupplied.
"There were people who oversold in January knowing that if they can sell and not get canceled, they can make up for some of their losses," the Ohio Valley shredder said.
A Midwest shredder source said many dealers had to sit on inventory after the market fell by $70-80 per gross ton in April-June because the material was too expensive to move previously.
"Most of that inventory was moved in December and January, so there will be a lot less tons coming into the market next month, so I don't see any downside for February right now," the Midwest shredder source said.
Almost all shredders assessed in the Southeast raised their scale buying prices by $5-22 per gross ton. Fastmarkets' price assessment for steel scrap shredder feed, fob Southeast surged to $135.42 per gross ton on Monday January 13, up by 13.2% from $119.64 per ton last week.
In the Ohio Valley, half the shredders assessed increased their scale prices by $15-35 per ton. The assessment for shredder feed, fob Ohio Valley rose by 9.5% to $132.76 per gross ton from $121.29 per ton a week ago.
In the Midwest, the assessment for shredder feed, fob Midwest jumped to $124.86 per gross ton, up by 10.6% from $112.91 per ton the previous week, after seven shredders in the region raised buying prices by $20-25 per ton.