Ferrous Scrap Loses More Value in Early July

Ferrous Scrap Loses More Value in Early July

RMDAS pricing shows spot market falling $40 to $50 per ton for the second straight month.

July 20, 2012
Recycling Today Staff

For the second consecutive monthly buying period, steel mills in the United States were able to purchase scrap for as much as $50 per ton less on the spot market compared to what they had paid the prior month.

According to the monthly averages issued by the Raw Material Data Aggregation Service (RMDAS) of Pittsburgh-based Management Science Associates (MSA), prompt industrial grades fell by an average of $50 per ton on the spot market, while shredded scrap lost $47 per ton in value.

Average national per-ton prices in the buying period, which included the last 10 days in June and the first 20 days in July, fell to less than $350 per ton for all major ferrous grades.

Spot market prices in the North Midwest region (which consists of Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, Wisconsin, the Dakotas and the northwest corner of Indiana) are the lowest on average among the three RMDAS regions.

Prices in the North Midwest finished the buying period with the RMDAS prompt industrial composite grade (consisting of No. 1 busheling, No. 1 bundles and No. 1 factory bundles) at $333 per ton on the spot market, while No. 2 shredded scrap was valued at $328 and No. 1 heavy melting steel fell to $294.

The $294 per ton price marked the first time a ferrous scrap average price for any grade in any region had fallen to less than $300 per ton since 2010.

Recyclers contacted in mid-July began reporting some of the first positive signs in the ferrous scrap market after 60 troubling days.

A scrap processor along the Atlantic Coast said export buyers have begun making inquiries again and are offering prices above the U.S. mill sport market rate. He said the absence of export buyers has allowed domestic mills to bid down prices during the previous 60 days.

In the South, a scrap recycler says calls from mill buyers and export brokers he was receiving in the third week of July were beginning to move “in the right direction.” He added, “Each call I’m getting today, the price seems to move up by about $10 or $15 per ton.”

Steel mill output in the United States is beginning to demonstrate some signs of decline. According to the American Iron and Steel Institute (AISI), Washington, in the week ending July 14, 2012, domestic raw steel production was 1.843 million tons with a capability utilization rate of 74.6 percent. That production figure is down 1.4 percent from the previous week (ending July 7, 2012), when production was 1.869 million tons and the capability utilization rate was 75.6 percent.

Steel output in 2012 in the United States, however, remains above the 2011 level. Steel production the week ending July 14, 2012 showed a 0.5 percent increase from the same period in the previous year. What the AISI calls “adjusted year-to-date production” through July 14, 2012 was 52.93 million tons with a capability utilization rate of 77.9 percent. That is a 6.3 percent increase from the 50.72 million tons made during the same period last year, when the capability utilization rate was 74.5 percent.

Global steel output figures for June, compiled by the World Steel Association (worldsteel), Brussels, show that around 2.5 million fewer metric tons of steel were produced in June compared to May. China was among the nations with less output in June. The nation’s steelmakers produced 60.2 million metric tons of steel in June, down from 61.2 million metric tons the month before.

Steel production in Europe also declined in June, falling by about 600,000 metric tons—a smaller volume than China’s decline but a higher percentage. The EU decline from 15.3 million metric tons in May to 14.7 million metric tons in June represented a 4 percent drop in output.

Steel production in June also fell in the United States compared to May, but less sharply, dropping from 7.67 million metric tons in May to 7.30 million metric tons in June.

Comparing June 2012 to June 2011, global steel output was relatively stable, dropping to 127.90 million metric tons in June 2012 from 127.99 million metric tons in June 2011.

World crude steel production in June 2012 for the 62 countries reporting to Worldsteel decreased by 0.1 percent compared to June 2011, according to the organization. The monthly decrease, though mild, marks one of the few negative numbers in 2012, with much of the rest of the first half of the year having pointed to increased output.

“World crude steel production in the first six months of 2012 was 766.9 million metric tons, a slight increase of 0.9 percent compared to the same period of 2011,” the group states in its news release announcing the June 2012 figures. “North America and Asia showed an increase of 7.2 percent and 1.6 percent respectively (U.S. 8.4 percent and China 1.8 percent) while the EU and South America recorded negative growth of -4.6 percent and -3.5 percent each.”

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.