Pricing in Ferrous Scrap Market Stays Strong

The 2010 bull market for ferrous scrap continued in the April buying period, as scrap prices in most regions moved upward by from $10 to $30 per ton.

April’s buying period was marked by significant regional disparities, according to the statistical summary of April spot buying from the Raw Material Data Aggregation Service (RMDAS), compiled by Management Science Associates’ (MSA), Pittsburgh. (Click here to view the April report)

Buyers in the RMDAS North Central/East region (the New England states plus New York, New Jersey, Ohio, Pennsylvania, Kentucky, Maryland, eastern Virginia, West Virginia, most of Indiana and most of Michigan) paid an average of from $24 to $30 per ton on the spot market, depending on the grade.

But meanwhile, in the North Midwest region (Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, Wisconsin and the northwest corner of Indiana) buyers actually paid less for No. 1 heavy melting steel (HMS) and the same for shredded scrap as they did in March.

The South region showed a pattern all its own, with spot buyers paying $34 per ton more for prompt grades, but essentially the same as the March price for No.1 HMS and shredded scrap.

A cause for concern in the North American demand for scrap came in the form of a report from the American Iron and Steel Institute (AISI) that

The American Iron and Steel Institute (AISI) reported today that in the month of February 2010, U.S. steel mills shipped 6.3 million net tons of product, a 4.1 percent decrease from the 6.6 million net tons shipped in January. Ideally, a shorter calendar month helps explain part of the difference.

Compared to conditions in 2009, the monthly figure shows a more encouraging 46.1 percent increase from the 4.3 million net tons shipped in February of 2009.

In terms of mill production, 1.75 million tons of raw steel were produced by mills in the United States the week ending April 17, 2010 for a capability utilization rate of 72.6 percent. That figure is higher by 1.4 percent than the one for the week before, when 1.73 million tons of steel were produced. And as with the monthly shipping figure, the weekly production figure is far greater than the 980,000 produced during the comparable April week in 2009 (an increase of 79.7 percent).

Globally, the WorldSteel Association, Brussels, has revised its forecast upward for steel demand in 2010 and 2011.

“WorldSteel forecasts that apparent steel use will increase by 10.7 percent to 1.2 billion metric tons in 2010, after contracting by 6.7 percent in 2009,” the organization stated in a news release.

The new forecast presents an improved figure over the Autumn 2009 forecast for 2010. “With these projections, world steel demand in 2010 will exceed pre-crisis levels of 2007,” says the group. “In 2011, it is forecast that world steel demand will grow by 5.3 percent to reach a historical high of 1.3 billion metric tons. The resilience of the emerging economies, especially China, has been the critical factor enabling the earlier than expected recovery of world steel demand.”

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 Jeralyn Brown at 724-265-6574 or via e-mail at Jbrown@MSA.com.