Steel mills in the United States are melting scrap in March 2009 at roughly half the volume they were one year ago, creating weak demand for most grades of ferrous scrap.
On average, spot buyers in March paid about $20 per ton less for ferrous scrap, according to transaction pricing compiled by Management Science Associates Inc. (MSA) for its Raw Material Data Aggregation Service (RMDAS). To view the March numbers click on the link)
The national averages compiled through RMDAS showed mills nationally paying $20 per ton less for prompt industrial grades ($208 versus $228) and $19 per ton less for No. 2 Shredded Scrap, defined as .17 or above copper content ($201 versus $220).
No. 1 Heavy Melting Steel (HMS) lost less of its value, dropping $16 per ton in value nationally in the spot market and losing just $3 per ton in value in the South region (which includes Texas, Oklahoma, Louisiana, Arkansas, Mississippi, Tennessee, Alabama, Georgia, Florida, South Carolina and parts of North Carolina and Virginia).
Regionally, scrap sellers in the North Midwest noticed the sharpest decline, with industrial grades falling $29 per ton and No. 2 shredded scrap dropping by $30 per ton.
Some scrap recyclers reported very little buying taking place at all in the March buying period, with demand from both the domestic and export markets being muted.
The continued lack of demand was reflected in statistics kept both domestically and globally.
In the United States during the week of March 10-14, raw steel production was 976,000 net tons and the capability utilization rate of mills was just 40.9 percent.
Those figures reflect a dramatic difference from activity one year ago, when domestic weekly steelmaking production stood at more than 2.1 million tons in the week ending March 14, 2008, reflecting a capability utilization rate of 89.7 percent.
The 54.4 percent year-against-year weekly production decline serves to demonstrate the lack of demand for finished steel in 2009. Those looking for a rebound have not seen it as of mid-March, as figures for the week of March 14, 2009 were down 6 percent from the previous week ending, when production was slightly more than 1 million tons.
Globally the decline is not quite as dramatic, but is significant nonetheless. World crude steel production in February 2009 for the 66 countries reporting to the World Steel Association (Worldsteel) was 84 million metric tons, a figure that is 22 percent lower the figure for February 2008.
Worldwide, “crude steel production showed a continued decrease in nearly all the major-steel producing countries in February 2009 compared to the same month [of] 2008, except [in] Iran and China,” reported Worldsteel in the news release accompanying the chart of February statistics.
China’s crude steel production for February 2009 was 40.4 million metric tons, an increase of 4.9 percent compared to February 2008. Not all of Asia was back on fast pace, however, as Japan produced 5.5 million metric tons of crude steel in February 2009, down 44 percent compared to the same month last year. Similarly, South Korea showed a decrease of nearly 25 percent compared to February 2008.
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),