Ferrous Scrap Prices Hold Steady in February

After two months of significant price gains across all scrap grades in the ferrous market, changes in the February buying period were less dramatic.

Mill buyers paid some $20 per ton more for prompt grades, while prices for shredded scrap and No. 1 Heavy Melting Steel (HMS) were largely unchanged, according to the statistical summary of February spot buying from the Raw Material Data Aggregation Service (RMDAS), compiled by Management Science Associates’ (MSA), Pittsburgh. Click here to view the February RMDAS prices.

The premium paid for prompt grades (#1 busheling, #1 bundles and #1 factory bundles) widened to a national average of some $70 per ton compared to shredded scrap and $100 compared to No. 1 HMS.

That spread is significantly different from what was occurring in the Aug. 2008 to Jan. 2010 time frame, when the spread between prompt and shredded scrap hovered around $40 per ton and $65 to $70 between prompt grades and No. 1 HMS.

The patterns in the February spot market were uniform across all three RMDAS regions (South, North Midwest and North Central/East). While spot buyers were paying from $16 to $23 more per ton for prompt grades across all regions, the other two grades were showing consistently little change in price.

Buyers of No. 2 shredded scrap paid, on average, from $2 to $4 less per ton across all three regions. Meanwhile, No. 1 HMS was being purchased for an average of $2 per ton more in the North Central/East region and $4 per ton less in the North Midwest.

North American demand for scrap continues to move slowly upward, while pricing also continues to be buoyed by export demand and by relatively weak generation.

Although scrap recyclers have reported that strong pricing has boosted the amount of scale traffic for obsolete scrap, supply remains limited by a number of other factors: weak industrial output, a depressed construction and demolition industry and snowy or icy weather causing regional interruptions.

A scrap recycler in the Southeast estimates that demolition activity in his region is off by 40 percent or more—and that is in a part of the country that does not experience the same seasonally reduced schedule that is common farther north.

On the demand side, steelmakers in the 66 nations traced by the WorldSteel Association, Brussels, produced nearly 109 million metric tons of steel in January 2010, an increase of some 2 million metric tons compared to the month before.

Steelmakers in both China and the United States produced more steel in January, although Russian steelmakers took a step backward for the month, as did steelmakers in Turkey.

Domestically, more than 1.64 million tons of steel were produced in the United States the week of Feb. 7-13, 2010, according to the American Iron and Steel Institute (AIS1). That figure represents the use of 68 percent of steel mill capacity—a healthy number compared to the 45 percent of capacity that was in use in the second week of February, 2009. Only 1.06 million tons of steel was produced during that week.

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.