RMDAS May figures point to grade and regional differences

RMDAS May figures point to grade and regional differences

Obsolete grades fell most sharply in service’s North Midwest region.

May 21, 2018
Brian Taylor
Auto Shredding Ferrous

Data collected and averaged by Pittsburgh-based MSA Inc. for its Raw Material Data Aggregation Service (RMDAS) shows ferrous scrap values dropped less sharply in May 2018 in the two other RMDAS regions compared with its North Midwest region, which consists of Illinois, northwestern Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Wisconsin and the Dakotas.

While mill buyers in the North Midwest region paid some $23 per ton less on average for No. 1 heavy melting steel (HMS) in the first three weeks of May, that same grade fell by just $16 in the RMDAS South region and by only $9 in its North Central/East region.

Prompt grades moved in a narrow range in all three regions, rising or falling by $4 per ton or less. Mills in the South continue to pay a premium for prompt grades, with transactions averaging $416 per ton in May compared with $398 and $397 in the other two regions.

Shredded scrap dropped by $10 per ton in the North Central/East region, by $15 per ton in the North Midwest and by $18 per ton in the RMDAS South region. The larger drop in the South brought its per ton price down to $369, meaning mills there paid $7 per ton less than the $376 paid by mills in the North Central/East region in May.

A ferrous trader who does business in the Midwest says the obsolete grades may have dropped in the northern regions based on improved scrap flows putting more scrap on the market. “Flows are good due to weather finally breaking; some of it was flow that had been held up due to our prolonged and nasty winter,” he comments.

He adds, “Demolition is good, with several projects in our region specifically, and continued low interest rates have helped continue to spur this.”

A processor in the Upper Midwest adds, “Our yard is staying pretty busy.” Regarding ferrous scrap demand in his region, he comments, “There is talk of [obsolete grade pricing] going down more, but I don't really see that happening if mill demand stays where it is. Mills and foundries seem to be staying busy.”

The broker says he expects stable-to-upward price pressure could remain on prime or prompt grades, in part because sales in the auto industry may finally be tapering off after several solid years. “Automotive [manufacturing] is doing OK, but not setting new records every month. In the coming months, prime will be tight as [auto plants] take summer shutdowns in either June or July.” He adds, “I believe the mills have been nervous about prime supply for some time.”