After gaining value during the last month of 2011 and the first month of 2012, pricing in the ferrous scrap market fell back in February, dropping by about $30 per ton for most grades in most regions.
According to the monthly averages issued by the Raw Material Data Aggregation Service (RMDAS) of Management Science Associates (MSA), Pittsburgh, prices paid by mill buyers for Prompt Industrial Composite grades in the February buying period (the first 20 days of February) fell most sharply. (Click here to view February Prices.)
In the South region (consisting of Alabama, Arkansas, the Carolinas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee, Texas and western Virginia), prompt grades fell by $56 per ton in February compared to the month before.
The RMDAS Prompt Industrial Composite grade (consisting of No. 1 busheling, No. 1 bundles and No. 1 factory bundles) also fell in value in other regions—by $49 per ton in the Midwest and a comparatively lower $37 per ton in the North Central/East region.
The downward trend of prompt grades caused them to fall below $500 per ton in February after having broken through that price ceiling the prior month.
Shredded scrap fell almost uniformly by value in February across all three RMDAS regions, within a $30-to-$32-per-ton range.
On the scrap demand side, in the week ending February 18, 2012, domestic raw steel production was 1.94 million tons, putting production at a capacity rate of 78.6 percent, according to the American Iron and Steel Institute (AISI), Washington.
That figure represented a 0.7 percent increase from the previous week (ending February 11), when production was 1.93 million tons. The figure represents a larger increase from the 1.78 million tons produced in the week ending February 18, 2011, when the capacity rate was just 75.4 percent. The current week’s production versus the comparable week in 2011 represents a 9.1 percent increase from the amount of steel being produced in 2011.
The export market is proving much less stable in the early part of 2012. Figures from the WorldSteel Association (www.worldsteel.org) indicate the world’s steelmakers produced 7.8 percent less steel in January 2012 compared to January 2011. Producers in global production leader China were off 13 percent in January 2012 compared to one year earlier.
Historically, there is often a rebound in steel production in January after many mills ease back their schedules in December. But in January 2012, the global production figure stayed essentially flat with where it was the month before, at 117 million metric tons of production.
Turkey remains a bright spot in the market for ferrous scrap exporters. That nation’s steelmakers produced 3.1 million metric tons of crude steel in January 2012, a total some 14.4 percent higher than the January 2011 production figure.
Scrap buyers in Turkey will continue to watch the euro-versus-dollar aspect of the currency market as they seek out supply. Provided there is ferrous scrap available in Europe, demand there will be lighter, based upon January steel production figures.
According to WorldSteel, the EU 27 nations produced 5.6 percent less steel in January 2012 compared to January 2011, with considerable drops in output in Spain, the United Kingdom and Belgium.
On the scrap generation side, a Midwestern recycler expressed concern that the February drop in ferrous prices may cause a decline in auto bodies heading into shredder yards. He characterized demolition scrap flow as “intermittent” and usually dependent on one or two major projects rather than any genuine rebound in demolition and construction activity.
Across the scale retail traffic remains healthy because of strong nonferrous prices, which brings in “loose tin and some iron and steel odds and ends,” according to the recycler.
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.