Ferrous Prices Slope Downward, RMDAS February Figures Indicate

A slow pace of activity at the nation’s steel mills helped move ferrous scrap prices lower in February, as mills paid from $10 to $33 less per ton on the spot market, depending on the grade and region.

February spot buyers were able to buy shredded and prompt grades in particular for a lower price, according to transaction pricing compiled by Management Science Associates Inc. (MSA) for its Raw Material Data Aggregation Service (RMDAS).

National averages compiled through RMDAS showed mills nationally paying $32 per ton less for prompt industrial grades and $30 per ton less for No. 2 Shredded Scrap (.17 or above copper content).

No. 1 Heavy Melting Steel (HMS) lost less of its value, dropping $12 per ton in value nationally in the sport market and losing just $10 per ton in value in the North Central/East region (which stretches north to south from New England to northeastern North Carolina and west to Ohio, Michigan, Kentucky and much of Indiana).

Regionally, scrap prices held up most closely to January levels in the South, where per-ton average price drops for the three major grades ranged from $16 to $23 on the spot market.

Scrap recyclers reported restricted inflows of scrap for February, citing slow production at manufacturing plants, limited demolition activity and, in some parts of the country, winter weather that hampered collection and trucking activity.

The slower generation was matched by continued slowness at melt shops. Domestically, the American Iron and Steel Institute has reported that mills in the United States produced slightly more than 1 million tons of steel in the week ending Feb. 14. That represented a capability utilization rate of 45.4 percent.

That figure is up from the historically low weekly totals from mid-December through mid-January 2009, but it still reflects a severe drop-off compared to the healthy economy of one year ago.

In roughly the same mid-February week in 2008, steel production was at 2.1 million tons and the capability utilization rate was 91.6 percent.

Globally, the world’s steelmakers in January produced some 86 million metric tons of steel, according to the World Steel Association. That figure is 24 percent lower than the global amount produced in January of 2008.

Recyclers have no way of knowing whether households around the world in March will be any more willing or able to buy new autos or appliances or take any other actions that will cause the increase in the demand for steel that is needed.

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 Ralph Pinkert at 773-588-1199 or via e-mail at RPinkert@MSA.com.