Ferrous

IDLE STATE

If economists are correct in citing a stalled U.S. economy, then ferrous scrap pricing once again may have been a leading indicator.

After per ton pricing moved up in the first five months of the year, it has idled around $101 per ton throughout the summer.

Steel melting rates have improved greatly since last year, but the figure is somewhat deceptive as several idled mills were removed from the denominator. Total tonnage produced has been up less than 0.5 percent in some recent weeks compared to a year ago.

Current conditions are tolerable for many scrap processors, and certainly preferable to the $65 to $80 per ton doldrums of much of the past two years. "Pricing is fair right now; it’s pretty equitable," says one Ohio processor of the ferrous market.

Demand from steelmakers in his region also is sufficient. He notes, "Material is not coming in like it used to, and the flow is not coming in as well as we’d expect."

It remains to be seen whether the lack of flow from the industrial side indicates a weak manufacturing sector, and economic indicators are mixed. Automakers claim strong sales numbers, but a slight downturn in new housing starts and reduced consumer spending could affect the appliance and other durable goods sectors that consume finished steel.