Ferrous Markets Take Downward Swing

Slowdowns in both export orders and domestic mill capacity are being cited as reasons for declining ferrous scrap pricing throughout the U.S.

May transaction prices have reportedly declined dramatically in many regions, and dealers say they do not anticipate a bounce back during the warmer summer months.

One Midwest scrap dealer says mill order books are finally through their backlogs, and the mills are now confronted with many fewer orders to deliver.

Domestic steel demand could remain in the doldrums if the summer construction season is a slower one compared to the past two, and also if car-buying habits are changing as rapidly as early figures indicate.

Statistics published in automotive trade magazine Ward’s Automotive Reports are showing a 13.5 percent drop in sales for sport utility vehicles (SUVs) in the first quarter of 2005 compared to 2004, with sales of some of the largest models plunging more than 20 percent.

A static overall market combined with smaller vehicle sizes for those that are selling is a losing equation for the domestic steel industry. “Cars drive this country, and they’re in the doldrums,” notes the scrap dealer.

The dealer sees the market staying suppressed in the summer months as the model change-over year further slows an already lukewarm domestic auto industry.

As of early May, buyers representing offshore mills have not stepped in to bid the market back up, although dealers are hopeful lower prices, combined with the weak dollar, will soon attract them.