Ferrous Scrap Pricing Flat in March

Ferrous Scrap Pricing Flat in March

RMDAS figures show only minor per-ton price changes from February to March.

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After gaining value during January and then dropping back in February of 2012, ferrous scrap prices stayed relatively flat in March, with shredded scrap gaining just $1 per ton on the spot market.

According to the monthly averages issued by the Raw Material Data Aggregation Service (RMDAS) of Management Science Associates (MSA), Pittsburgh, national averages for the most commonly traded grades of ferrous scrap changed in value by $6 per ton or less in March. (To view prices, click on here.)

The largest price fluctuation in any RMDAS region was in the North Midwest, where prompt grades (consisting of No. 1 busheling, No. 1 bundles and No. 1 factory bundles) fell by $13 per ton on the spot market in March compared to the month before.

While prompt grades were losing $13 per ton in value in the North Midwest, they declined by $7 per ton in the North Central/East region and gained $1 in value in the South.

The lack of price movement marked the first flat month since October 2011, when national averages for the three common ferrous grades also moved by just $6 per ton or less.

In the March buying period shredded scrap traded within $1 per ton on average in all three RMDAS regions, while No. 1 Heavy Melting Steel fluctuated by no more than $6 compared to February.

A Texas recycler characterized supply as restrained in March, and speculated that some generators and smaller dealers were holding onto material in the expectation that prices will rise in early April.

Unusually mild winter weather also has been part of the story. Most of the heavily populated regions of the United States and Canada have experienced few if any snowstorms or long stretches of freezing temperatures. Although the construction sector is far from booming, there have been fewer seasonal interruptions halting demolition work, construction projects or highway projects.

At the National Demolition Association Convention in March in San Antonio, Texas, economist Dr. Anirban Basu of Sage Policy Group noted that the construction sector continues to lag other parts of the U.S. economy, most of which have been performing well for up to 10 consecutive financial quarters.

The Federal Reserve Industrial Production index number has been on an upward march since the third quarter of 2009. “The recession is now over, and has been for some time,” said Basu.

On the demand side, a scrap processor in the South says thanks to the export market March prices remained stable. “Domestic steel mills really cut back their buying in March, but export buyers stepped in, and I ended up shipping most of my ferrous material out through the port of Charleston,” he comments.

By the numbers, in the week ending March 17, 2012, raw steel production in the United States was 1.9 million tons with a mill capability utilization rate of 77.4 percent. That is up from 1.83 million tons in the comparable week from mid-March 2011. However, domestic steel production was down slightly (2.3 percent) from the previous week ending March 10, 2012, when production was at 1.96 million tons and the mill operating rate was 79.3 percent.
 
Year-to date, domestic steelmakers have produced 21.1 million tons, representing a 6.9 percent increase from the 19.75 tons produced through mid-March of 2011.

Globally, figures from the WorldSteel Association indicate the world’s steelmakers produced 1.9 percent more steel in February 2012, compared to February 2011. In China, the largest steel producer in the world, production increased by 2.2 percent over the first two months of 2012 from the same time last year.

The global steel production for February 2012 reached 119.2 million metric tons, an increase from the prior month’s figure of 117 million metric tons.

Turkish steelmakers continue to produce at a healthy level, with that nation’s 2.76 million metric tons of production in February 2012 representing a 12.3 percent increase compared to its steelmaking output in February 2011.

The Raw Material Data Aggregation Service (RMDAS) Ferrous Scrap Price Index is based on data gathered from a statistically significant compilation of verified ferrous scrap purchase transactions.

RMDAS is a service of Management Science Associates Inc. (MSA), Pittsburgh. Those seeking more information about RMDAS can contact MSA’s Jeralyn Brown at 724-265-6574 or via e-mail at JBrown@MSA.com.