Ferrous Department

Do “All Signs Point to Yes?”

Those willing to make a forecast for ferrous scrap pricing believe that a bounce back toward and over $100 per ton seems likely before the end of the third quarter.

Paul M. Higbee is a managing director of BT Alex Brown Inc., New York, who tracks publicly traded scrap processing companies. In remarks made at the ISRI Annual Convention in Orlando, he said that “$90 is too low for the equilibrium level” of the scrap supply and demand situation. “It will go up,” he says of the price of ferrous scrap.

Some processors in attendance were skeptical, with one asking Higbee why prices would move upward with, in this processor’s estimate, some “nine million tons of inventory” piled up.

Even Higbee, who was optimistic that the worst is over for ferrous markets, cautioned that any upward momentum would be halted if the U.S. finally falls into line behind many of the world’s other economies by experiencing recessionary conditions.

If no recession occurs and domestic steelmaking production capacity can bump up from its current 83% to the higher 80s, that could make the difference in demand that ferrous scrap processors need. That was the opinion of Jamie Held, a vice president-marketing for Metal Management Inc., who works out of the firm's Houston office.