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Gerdau halts inbound scrap at Arkansas mill

Mar 20, 2020 | 01:53 PM | Pittsburgh | Lisa Gordon

Tags  Gerdau Special Steel North America GSSNA, Fort Smith, SBQ, No 1 heavy melt

Gerdau Special Steel North America has stopped receiving scrap at its Fort Smith, Arkansas, location in a ripple effect brought on by its customers temporarily idling their businesses due to the novel coronavirus (2019-nCoV) outbreak.

Customers were advised via letter that the mill would stop receiving scrap at noon Friday March 20. It is allowing industrial account scrap to be delivered but has officially canceled any unshipped orders placed in February. 

“Due to the unforeseen effects of the Covid-19 virus on the automotive supply chain and our current raw material inventories and present customer demand, we will be halting scrap receiving for several days. We look forward to resuming scrap receipts when the situation demands,” a company spokesperson said.

Fort Smith’s special bar quality (SBQ) operations sell heavily into automotive applications, and many automakers have decided to temporarily shut down.

Suppliers are scared of a steep price decline in the April scrap trade, potentially with fewer opportunities to sell.

"It is a good thing we are on the ground floor; not too far to jump,” a southern shredder source said.

Other suppliers are panicking as more bad news emerges daily throughout the country. A scrap broker said a mill-owned brokerage firm is already floating the idea that its offers may be down $50 per gross ton compared with March levels. 

Fastmarkets assessed the steel scrap No1 heavy melt, consumer buying price, delivered mill Arkansas-Tenn at $260 gross ton on March 5. Since Fastmarkets launched its assessment of the Arkansas-Tennessee market in August 2013, the high for HMS 1 was $418 per gross ton in January 2014 and the low was $145 per gross ton in November 2015 - a year when gas and oil prices plummeted and were depressed for most of the year. 

HMS 1 in the Arkansas-Tennessee market had a more recent high of $340 per gross ton in January 2019 and a more recent low of $200 per gross ton in October 2019.


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