Prime ferrous scrap grades gained yet more value in the July buying period, but the steady parade of obsolete scrap that has flowed into yards seems to have helped the supply of other ferrous scrap grades catch up with demand.
The Raw Material Data Aggregation Service (RMDAS) steel mill transaction summaries released by Pittsburgh-based Management Science Associates (MSA) to nonsubscribers on July 20 show prompt scrap rose another $21 per ton in value on average in the United States in the previous 30 days.
That compares with just a $1 per ton rise for shredded scrap and a $3 gain for No. 1 heavy melting steel (HMS) scrap, according to the RMDAS figures. July export prices gathered by Fastmarkets AMM showed overseas buyers were unwilling to raise their bids for scrap from the United States.
While the July HMS and shred prices did not soar higher, the fact they simply held their value for another 30 days has seemed to put processors in a good mood.
“It’s been a good 12 months and a fantastic first half of 2021,” says a scrap processor on the East Coast. “With very strong ferrous and nonferrous prices, we have been able to expand margins, and pre-COVID volumes are returning,” he adds.
Although export prices may not be soaring, the ongoing overseas demand has its benefits, says the processor. “Strong container markets with prepaid and CAD [cash against documents via bank] terms have been great for cash flow to finance 30-to-45-day-term shipments in the domestic market,” he comments.
The processor says his company made investments in its shredder downstream system two years ago that have paid off nicely, along with a zorba price “going up 150 percent from pre-COVID,” he adds. “We are feeling good about the coming year and beyond.”
A processor in Ohio reports steady volumes but says he would welcome additional inventory and wonders whether much of the obsolete scrap reservoir has been brought into yards in the previous several months. While mill buyers each month may try to convince sellers the market is about to turn downward, he says he is not convinced.
The high-priced ferrous scrap market continues to be linked to a national and global demand for finished steel. The Washington-based American Iron and Steel Institute (AISI) keeps reporting weekly steel production numbers that demonstrate a rebound from darker COVID-affected days last year.
Year-to-date domestic steel output through July 10, 2021, stands at more than 48.7 million tons, with a mill capability utilization (capacity) rate of 79.2 percent. That is up 16.7 percent from the 41.7 million tons made during the same period last year, when the capacity rate was 66.7 percent, says AISI.
Globally through the month of June, crude steel production for the 64 countries reporting to the Brussels-based Worldsteel Association has amounted to more than 1 million metric tons. That represents a 14.4 percent increase over the amount of steel produced in the first half of 2020.
Global output in the month of June rose 11.6 percent compared with June 2020. Steel production in Europe, the Americas and Africa in June 2021 rose from 35 to 51 percent compared with June 2020, when restrictions in many nations were just starting to lift.
Year-to-date, steelmakers in Turkey have produced 19.7 percent more steel than they did in the first half of 2020, while steelmakers in India have churned out 31.3 percent more product. The two nations provide steady export markets for American ferrous scrap processors.
Securing supply, making shipping arrangements and managing risk remain management tasks for processors and traders who may otherwise be pleased with the buoyant market.
In terms of supply securement, Peru-based electric arc furnace (EAF) steelmaker Aceros Arequipa made a move in July to tap into the U.S. scrap market as way to supply its mill in South America.
Aceros Arequipa announced it has agreed to purchase an auto shredder yard in Florida formerly operated by Topsham, Maine-based Grimmel Industries. The Peruvian steelmaker also will acquire a second Grimmel yard in St. Petersburg, Florida, as part of the transaction.
The firm’s announcement states in part, “Among the main assets acquired are two 116,000-square-meter (1.25 million-square-foot) yards, a 6,000 horsepower and 450 RPM [revolutions per minute] shredder, as well as a magnetic metal separator that will allow the segregation of nonferrous material for export mainly to Asia.”
The EAF steelmaker says it expects to supply itself with 100,000 tons of ferrous scrap per year from the Florida operations, “reinforcing the supply of recycled steel” for its upgraded EAF melt shop in Pisco, Peru.