Ferrous scrap recyclers awaiting a price rebound after a downward summer trend are not finding relief as that season turns to autumn. Steel output figures in the United States remain sluggish, and export demand is not necessarily picking up the slack.
On the supply side, even though pricing has discouraged some collectors and dealers from selling scrap forward, factory and demolition activity in the U.S. has allowed supply to meet the tepid demand.
At the end of August, the Raw Material Data Aggregation Service (RMDAS) of Pittsburgh-based MSA Inc. tracked a noteworthy phenomenon from July 20 to Aug. 19.
Although just this May, steel mills on average were paying $185 more per ton for prime or prompt ferrous scrap compared with 1 ton of ferrous shred, three months later, that cavernous gap had disappeared, with most of the premium vanishing in July and August.
Mill scrap purchases tracked by the RMDAS July 20 to Aug. 19 showed mills on average paying just $9 per ton more for the RMDAS prompt industrial composite grade compared with No. 2 shredded scrap.
In mid-September, Davis Index is reporting lower scrap prices in Turkey and restrained buying from other common U.S. scrap export destinations, such as Bangladesh and India. Domestically as of Sept. 13, the pricing service says busheling is down another $22 per ton so far in September, while heavy melting scrap (HMS) is down about $20 per ton in the same region.
On the domestic demand front, the Washington-based American Iron and Steel Institute (AISI) says in the week ending Sept. 10, domestic steel production was 1.723 million tons, which was up 0.5 percent compared with the prior week.
However, the most recent weekly output figure represents a 6.3 percent decrease from the identical week in the previous year, when 1.839 million tons of steel were made. AISI has the current mill capability utilization (capacity) rate at 78.2 percent compared with 83.3 percent at this time last year.
Year-to-date production through Sept. 10 is at slightly more than 63 million tons, says AISI, while the industry’s average capacity rate this year stands at of 79.8 percent. The volume figure is down 3.8 percent from slightly more than 65.5 million tons made in the same time frame in 2021, when the capacity rate averaged 81 percent.
While conventional wisdom holds that lower scale prices eventually lead to a supply shortage-driven price rebound, it looks like recyclers will wait another month to see if that tipping point has been reached.