Declining demand causes another ferrous drop

Despite lower scale prices set in reaction to lower mill buying prices in the early May ferrous market, scrap has continued to flow into yards in the United States, with steady demolition activity among the contributors to a busy operating environment.

Processors in several regions in the U.S. tell Recycling Today much of their processing machinery is running full bore, despite the uncertainty of export demand and slightly tapering melt shop output at U.S. steel mills.

Steelmakers in the United States produced 0.9 percent less steel in the week ending June 4 compared with the prior week, according to the Washington-based American Iron and Steel Institute (AISI).

In addition to the week-to-week decline, the weekly output of 1.78 million tons represented a 3.2 percent drop from the 1.84 million tons produced a year ago in the week ending June 4, 2021.

Year-to-date figures compiled by AISI show production through June 4 stands at 38.87 million tons. That is down 1.6 percent from the 39.52 million tons made during the same period last year.

The early June domestic mill buying period seems to have reflected this partial lull, with Davis Index reporting U.S. markets having settled after that buying period down from $50 to $75 per ton, depending on the grade and region.

Davis Index says prompt grades fell in value some $75 per ton in the Chicago region. More commonly, they dropped by $50 or $55 per ton in other regions. No. 1 heavy melting steel (HMS) in Chicago, meanwhile, was “down [by] $55 per gross ton to $400 gross ton delivered,” Davis Index adds.

A relatively stagnant export market is not being helped by a continued lack of interest in U.S. scrap by Turkish buyers, combined with lower offers by potential buyers from Turkey.

“Demand for ferrous scrap remains sluggish following a lack of orders for Turkish steel products,” Davis Index reports June 10. Turkish mills were offering U.S. shippers from $400 to $410 per metric ton cost and freight (cfr) for blended No. 1 and No. 2 HMS shipments.

Tepid demand from other overseas buyers, including India, and from neighboring overland destination Mexico have combined to place downward price pressure on the ferrous market for about 60 days heading into the summer.

Just where the global economy—and global demand for steel—is headed has become a source of concern for executives in the recycling industry and beyond. The role of international trade in the ferrous scrap market was spelled out in late May at the World Recycling Convention hosted by the Bureau of International Recycling (BIR) in Barcelona.