No Spring Thaw Necessary

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Ferrous scrap price averages declined slightly in April, though the commodity continues to trade within a relatively narrow price range in 2012.

The prompt grades tracked by the Raw Material Data Aggregation Service (RMDAS) of Management Science Associates (MSA), Pittsburgh, showed the most consistent decline, falling from $10 to $19 per ton on average in the U.S. from April 1 to April 20.

The RMDAS prompt industrial composite grade (consisting of No. 1 busheling, No. 1 bundles and No. 1 factory bundles) fell by $19 per ton on the spot market as a national average, based largely on declines of that size in the North Midwest and North Central/East RMDAS regions.

The prompt grades price decline was less dramatic in the RMDAS South region (consisting of Alabama, Arkansas, the Carolinas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee, Texas and western Virginia), where shippers on the spot market received just $10 less per ton in April.

Shredded scrap sold for an average of $8 less per ton in April, according to MSA, though again the price decline was less dramatic in the South, where the RMDAS No. 2 shredded scrap grade lost just $2 per ton in value.

The South also showed a trend difference when it came to the No. 1 heavy melting steel (HMS) grade, which fell from $5 to $11 per ton on average in the two northern regions. In the South, meanwhile, mills on the spot market paid $11 per ton more for No. 1 HMS in April compared with March.

A recycler in the western U.S. says he remains concerned about supply, noting that industrial and retail generation seem to have hit a plateau in his region. Without a rebound in construction, he does not see volumes increasing in the spring.

The mild winter was among the topics addressed at the Spotlight on Ferrous session at the ISRI (Institute of Scrap Recycling Industries Inc.) 2012 Convention and Exposition in Las Vegas in mid-April.

“The unusually mild winter will result in [improved] volumes in the first quarter for recyclers,” said Rich Brady, an executive vice president at OmniSource, Fort Wayne, Ind., when responding to a question about the winter of 2011-2012.

The downside, Brady said, is the disappearance of any “spring thaw” on scrap flows that recyclers may expect based on past Aprils and Mays. “We’ve actually seen some flows decreasing a bit in April,” Brady said, “which is not normal.”

On the demand side, panelist Pat McCormick of World Steel Exchange, Englewood Cliffs, N.J., said he anticipated overall modest growth in world steel production in 2012. “We expect global steel growth of 1.6 percent in 2012—about one-third of the 2011 growth rate,” he commented.

McCormick also noted that global ferrous scrap demand hit a bit of a rut with the Arab Spring uprisings of early and mid-2011 (affecting Turkish mills), but that buyers from mills in China tend to step in to buy additional scrap when prices drift down because of global events such as these.

He added that World Steel Exchange and its sister research company, World Steel Dynamics, saw a “bounce back” occurring in the first half of 2013 that could result in 5 percent steel production growth for the year and rising prices.

Panelist Spencer Johnson of International FC Stone, New York, remarked on the correlation of LME (London Metal Exchange) steel billet pricing and ferrous scrap pricing, noting that each price has spent several months rebounding from a decline caused by the collapse of MF Global in October of 2011.

In the United States in the week ending April 14, 2012, 1.98 million tons of raw steel were produced, creating a capacity utilization rate of 79.9 percent, according to the American Iron & Steel Institute (AISI, www.steel.org). That figure marked an 8.9 percent increase from the 1.81 tons produced one year earlier in the week ending April 14, 2011, when the capacity utilization rate was just 74.2 percent.

Production for the week ending April 14, 2012, also was up 0.9 percent from the previous week (ending April 7, 2012), when the capacity utilization was 79.2 percent.

Panelists at the ISRI Ferrous Spotlight session commented that the AISI figure is an average created by combining statistics from unlike steel industry sub-sectors. “The capacity rate is quite a bit higher for sheet mills than for [those producing] beams and long products,” McCormick said.

Johnson added that mills that make tube and pipe products for the energy sector also are operating at higher rates than structural steel mills.


April 2012 Spot Pricing

 

Total U.S.

North Central/ East North Midwest    South
Prompt Industrial Composite $450 $450 $441 $458
#1 HMS $405 $401 $402 $416
#2 Shredded Scrap $438 $439 $428 $445
#2 Shredded/Change vs. Month Before -$8 -$9 -$11 -$2

Ferrous scrap continues to trade in a narrow range in 2012, with the April buying period showing slightly lower per-ton prices overall compared with March.

Reported regional aggregated spot market prices per gross ton shown for each commodity are based on all Management Science Associates (MSA), Pittsburgh, Raw Material Data Aggregation Service (RMDAS) participants’ actual order data submitted to and processed by MSA as of the 20th of each respective “buy month,” rounded to the whole integer. A map of RMDAS regions is available at http://rmdas.msa.com, as is a further explanation of RMDAS methodology and an accompanying disclaimer.

No. 2 shredded scrap is defined as containing 0.17 percent or greater copper content. The prompt industrial composite consists of an average of No. 1 bundles, No. 1 busheling and No. 1 factory bundles. Additional pricing information on each grade can be found at www.RecyclingToday.com.

© 2012 Management Science Associates Inc. All rights reserved RMDAS is a trademark of Management Science Associates Inc.

 

(Additional information on ferrous scrap, including breaking news and consuming industry reports, can be found at www.RecyclingToday.com.)