A slide in pricing that began in August has continued for ferrous scrap, with the October buying period revealing dramatic drops for all grades in all regions. (Click here to view October figures)
Transaction pricing compiled by Management Science Associates Inc. (MSA) for its Raw Material Data Aggregation Service (RMDAS) shows buyers of prompt grades in October paid less than half of what they paid per ton in September.
Nationally, the average spot buyer of prompt ferrous scrap (consisting of #1 busheling, #1 bundles and #1 factory bundles) paid $261 per ton, down from the $564 per ton paid in the September buying period.
The sharpest drop for this grade came in the RMDAS North Central/East region, where the average ton on the spot market sold for $306 less in October. The drop in the South was not far behind, with the average ton losing $297 in value.
Shredded Scrap also fell in value, with the average ton on the spot market dropping from $378 in value in September to $230 in the early October buying period.
Similarly, #1 Heavy Melting Scrap (HMS) lost more than $100 per ton in value, dropping from $306 per ton in September to $205 in October.
As dramatic as the drop-off is in the RMDAS numbers, the monthly average price is most likely higher than transaction levels as of October 20.
A number of recyclers are reporting that mills continue to make very few offers for scrap, and the offers made are lower yet. Sims-Metal Management and other large recyclers have communicated to their scrap buyers to quickly change their scrap pricing formulas, and in some cases to curtail or significantly cut back their buying activity.
News reports from around the world indicate that steelmakers are cutting back output as steel-intensive activities such as infrastructure projects in China, construction in the Middle East and automotive demand in the developed world have all been hitting slow patches at the same time.
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),