RMDAS transactions show spot buyers paying $40 to $50 more per ton for ferrous scrap in early November.
After the first two months of fall reflected that very word regarding ferrous scrap pricing, sellers in November were able to fetch as much as $50 to $53 per ton more for their scrap (depending on the grade and region). (Click here to see figures for the month.)
Spot market transaction averages calculated by Pittsburgh-based Management Science Associates (MSA) for the Raw Material Data Aggregation Service (RMDAS) show that mill buyers on the spot market bought scrap for $32 to $53 more per ton in the November buying period, which ran from late October through November 20.
The rebound was helpful to scrap processors and shippers who had watched the value of their inventories drop throughout much of the previous 60 days. No. 2 shredded scrap that could be sold for an average of $408 per ton in August was worth just $344-per-ton on average during the October buying period.
Looking further at national averages for November, shredded scrap finished the month at $392 on the spot market, just $16 shy of where it stood in August. No. 1 heavy melting steel (HMS) fetched $354 in November, just $14 shy of its August price, but still $51 per ton below the May 2012 price of $405 per ton.
Regionally, pricing climbed most vigorously in the North Central/East region (consisting of the New England states, Delaware, Kentucky, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania, West Virginia, most of Indiana, eastern Virginia and eastern North Carolina), where shredded scrap gained $52 per ton and prompt grades gained $50 per ton. Although Super-storm Sandy is likely now yielding new supplies of ferrous scrap, during parts of the November buying period processing activities were disrupted by power outages and transportation was hindered by fuel shortages in part of this region.
On the generation side, shredder operators and other processors continue to report slow scrap flows, particularly from the construction and demolition sectors.
Affecting both the demand and supply sides of the ferrous scrap equation, statistics from the steel industry in the United States indicate that other sectors may have limped through the fall of 2012 as well.
In mid-November, the American Iron and Steel Institute (AISI), Washington, D.C., reported that in September 2012, U.S. steel mills shipped 7.23 million net tons of steel, which was a 13.7 percent decrease from the 8.37 million net tons they had shipped the previous month. The figure marked a 9.0 percent decrease from the 7.95 million net tons shipped in September 2011.
“Shipments in September were down 13 percent vs. the 2012 monthly average through August and were the lowest monthly shipment total since February 2011,” reported the AISI. “Raw steel capacity utilization in September was 70.4 percent, the lowest monthly total in 2012.”
The downturn comes just before a time of year when it is likely to be followed by some seasonal hiccups, as steelmakers avoid carrying too much year-end inventory while also trying to ensure they have enough scrap on hand in case severe weather affects road and barge transportation.
Globally, steel production also tailed off in September, although figures from the WorldSteel Association, Brussels, point to an October rebound. After producing 123.67 million metric tons of steel in September, the world’s steel industry bounced back to produce 126.14 million tons of in October.
China accounted for much of that difference by jumping from 57.9 million metric tons of production in September to 59.1 million metric tons in October. Also gaining momentum was Brazil, which went from 2.85 million metric tons of output in September to 3.15 million metric tons in October.
The Raw Material Data Aggregation Service (RMDAS) Ferrous Scrap Price Index is based on data gathered from a statistically significant compilation of verified ferrous scrap purchase transactions.
RMDAS is a service of Management Science Associates Inc. (MSA), Pittsburgh. Those seeking more information about RMDAS can contact MSA’s Jeralyn Brown at 724-265-6574 or via e-mail at JBrown@MSA.com.