RMDAS Ferrous Scrap Prices Hold Steady in July

As much of the country endured a heat wave in July, ferrous scrap prices reacted by staying virtually motionless, shifting by only a few dollars per ton compared to the month before.

Steel mill buyers of ferrous scrap on the spot market continued to pay more than $500 per ton for prompt grades in July, according to the Raw Material Data Aggregation Service (RMDAS) of Management Science Associates (MSA), Pittsburgh. (Click here to view figures for the month)

National price averages for three of the largest grades tracked by RMDAS each increased by fewer than $5 per ton in July compared to June.

The prompt industrial composite grade (consisting of No. 1 busheling, No. 1 bundles and No. 1 factory bundles) sold for $512 per ton during the July buying period, up just $4 compared to June.

Spot buyers of No. 2 Shredded Scrap paid an average of $451 per ton in July (up $3) and buyers of No. 1 Heavy Melting Steel (HMS) paid $416 on average (up $3).

Regional variations on the price averages were minimal. The single greatest price increase in July was the $9-per-ton increase paid by spot buyers of No. 1 HMS in the RMDAS South region (consisting of Alabama, Arkansas, the Carolinas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee, Texas and western Virginia).

Scrap recyclers continue to report flows of scrap that are steady if not spectacular. Manufacturing output figures in the United States are stable. Unfortunately, construction figures in the United States also are stable, but at an activity level that remains slow in most regions.

“There is no getting around the fact this industry is stuck in a multi-year slump,” says Ken Simonson, chief economist of the Associated General Contractors of America. “The private sector isn’t growing fast enough to boost demand for new structures, while public construction budget cuts appear to be accelerating.”

Despite an economy that is on slow idle, domestic steel production has held steady. The American Iron and Steel Institute (AISI) reports that for the week ending July 16, 2011, domestic raw steel production was nearly 1.9 million tons, with mills running at a capacity rate of 76.8 percent.

That weekly figure is 11.6 percent higher than the steelmaking rate in mid-July of 2010 and also is up 1.7 percent from production the previous week.

The geography of domestic steelmaking is evident in the AISI’s regional breakdown of steel production in mid-July 2011. The AISI’s Southern region produced 631,000 tons of steel, followed by the Indiana/Chicago region’s 463,000 tons and 279,000 tons in the AISI Midwest region. The Pittsburgh/Youngstown region made 160,000 tons of steel; followed by 112,000 tons in the Northeast Coast region; 108,000 tons in the Detroit region; 88,000 tons in the Western region; and 38,000 tons in the Lake Erie region.

Globally, the steelmakers produced 127.7 million metric tons of steel in June, according to the Brussels-based World Steel Association (WorldSteel). That figure was down by more than 2 million metric tons compared to May. China’s steelmakers cut back production by about 300,000 metric tons in June, while production in the European Union fell by 600,000 metric tons, according to WorldSteel.

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.