Anxiety in the distance

Departments - Commodities Ferrous

Ferrous scrap processors and steelmakers might find themselves too busy this spring to devote large amounts of time to worrying about war in Europe, global trade sanctions and rising inflation rates.

April 29, 2022

War in Europe, global trade sanctions and worrying inflation rates in North America are causing economists, investors and executives alike to begin raising the alarm about conditions likely to lead to a recession.

Despite such concerns, ferrous scrap processors and steelmakers might find themselves too busy this spring to devote large amounts of time to worrying. Steel mills are finding buyers for their products, and scrap yard managers are reporting healthy inbound flows of material.

“After a winter lull, flows have rebounded nicely in our area in March and into April,” a processor based in the Mid-Atlantic region says.

Several regions of the United States contended with more than one bout of severe winter weather in the first quarter of this year. Thus, spring is being welcomed this year by scrap processors as much as it is by bird watchers and baseball fans.

“In addition to these soaring prices, analysts say widespread steel shortages loom.” - John G. Murphy, U.S. Chamber of Commerce

“Flows are very good,” an Ohio processor says as of mid-April. Unlike much of the first quarter, he indicates the balance could even be tipping away from tight inventories. “Supply is outpacing demand right now,” he says.

Spring transaction pricing tracked by Davis Index and by Pittsburgh-based Management Science Associates Inc.’s Raw Material Data Aggregation Service (RMDAS) show upward-bound prices that fit in with wider concerns about inflation.

The three benchmark grades Davis Index tracks rose by roughly $80 to $110 per ton in value in March. RMDAS grade price rises were similar for the month, with its prompt industrial composite grade crossing the $700 per ton threshold.

Metals industry media reports in March covered a parade of finished and semifinished steel price hikes. Although scrap surcharges were not directly cited always, pricing for pig iron (which competes with scrap on some fronts) was mentioned.

Disruptions in the availability of steel and most of its key ingredients have been tied to Russia’s invasion of Ukraine and trade-related reactions to it. (See the article “Worlds of disruption" in this edition.)

Despite the global turbulence, steelmakers in the U.S. seem to be maintaining a steady production pace in their melt shops. The Washington-based American Iron & Steel Institute (AISI) reported weekly output in the 1.74 million tons range for several weeks running as of early April.

In the first full week of April, AISI says 1.74 million net tons of steel were made at a mill capability utilization (capacity) rate of 79.7 percent. Production was 1.79 million net tons in the week ending April 9, while the capability utilization then was 78.8 percent. That represents a 0.9 percent increase in output from the previous week, when the mill capacity rate also was in the 79 percent range.

Ferrous scrap exporters have long had willing buyers in Turkey, and steelmakers in that nation are anticipating boosting their output to cater to nations that might be reluctant to buy from Russia.

In mid-March, Reuters reported member companies of the Turkish Steel Exporters’ Association had calculated disruption in war-torn Ukraine and sanctions on Russian producers could yield an additional $1 billion of Turkish steel exports to the EU in 2022.

East and West coast exporters might welcome that possibility because U.S. Census Bureau figures point to some weakness in U.S. scrap exporting this January and February. In February, ferrous scrap exports off the East Coast fell by 50,000 metric tons, or 9.8 percent, compared with the prior month.

No matter where the scrap is melted and the steel made, buyers of steel are more concerned about its rising price.

As of mid-April, the U.S. Midwest Domestic Hot-rolled Coil Steel Index managed by the Chicago-based CME Group showed forward settlement prices ranging from $1,403 to $1,470 per metric ton for the second quarter.

Trade groups representing the nation’s largest users of steel have been remarking on the metal’s rising price throughout the pandemic recovery months of the past year-and-a-half. They are among those that see a definite tie-in to larger concerns about inflation.

In an early April blog post, John G. Murphy of the U.S. Chamber of Commerce says the group’s 2018 prediction that steel tariffs imposed then would “directly harm American manufacturers” were on target. “All of that came to pass,” he writes.

Advocating for further rollbacks on Section 232 tariffs, Murphy writes, “In addition to these soaring prices, analysts say widespread steel shortages loom. Steel-consuming industries represent about half of all U.S. manufacturers.”


Davis Index Private Ltd. is headquartered in Singapore with market analysts in Barcelona, Spain; Chicago; Dallas; Dnipro, Ukraine; Los Angeles; Mexico City; Pune, India; Singapore; and Toronto. Davis publishes physical market price indexes in more than 80 countries and its market coverage comprises ferrous and nonferrous scrap, secondary nonferrous alloys, base metal premiums, finished steel products in specific geographies, bulk freight and container freight. Davis publishes indexes on a daily, biweekly, weekly and monthly basis, depending on the type of material and the open-market trade volume for each material. The Davis Index Ferrous Scrap Export Prices are calculated based on transaction data received that are then volume-weighted and normalized to produce a final index value. Methodology information is at To subscribe, visit