After a slight downturn in February, prices paid for ferrous scrap moved back up in March. Mills paid from $7 to $33 more per ton for scrap, depending on the grade and region. Shredded Scrap hit $400 per ton in the North Midwest Region. (Click here to view the full list of prices March Prices.)
Reported regional aggregated spot market prices compiled by Management Science Associates (MSA),
Regionally, the South showed the least volatility in March, with mills on average paying just from $7 to $11 per ton for their scrap, depending on the grade. In the North Midwest region (
Steelmaking continues to be a growth industry, with figures compiled by the International Iron and Steel Institute (IISI), Brussels, for February 2008 steel production showing growth 5.3 percent growth over February 2007. The 66 nations reporting to the IISI churned out some 107 million metric tons of product in February.
However, a moving annual total (MAT) growth rate calculated by the institute has shown a slowdown from a peak in March 2007 of 10.8 percent to 6.2 percent for early this year. In particular,
A slower growth rate may finally ease some of the pressure on ferrous scrap supplies and help the market achieve something closer to equilibrium. A question remaining, however, is whether the ongoing global production of so much steel will require a lengthy time horizon for scrap supply to begin reaching a point where buyers do not feel strained to obtain adequate supply.
For now, looking for supply and keeping up with demand continue to make the world seem like a busy place for scrap recyclers. “We’ve got a lot going on and we’re short-handed,” sighs a shredder operator in
There is no shortage of destinations that wish to buy scrap, procuring enough to fill orders is the bigger problem. “People have to realize, there is less and less scrap out there,” says one
Adds a recycler in the mid-South, “The manufacturing segment is slowing and not really producing [scrap] at good levels.”
Generation has not been helped by a slowdown on the demolition side of the business. A large demolition contractor in the South estimates a drop-off of about 25 percent in current business in the first two months of 2008 compared to 2007, and he calculates that quoting and bidding activity for the rest of the year is off a similar percentage.
On the East Coast, a shredder operator cites a dramatic drop-off of material from the construction and demolition segments, even guessing that a 50 percent decline year-against year is not out of the question.
Several factors creating the drop-off are cited by both sources, each of whom does not wish to conclude that the pattern is long-term. A snowy and icy (in the north) or soggy and windy (in the South) winter have made adhering to construction schedules difficult, which could explain some of the tapering off in February.
Beyond the seasonal aspects, what is hoped to be some temporary tightness in credit markets is also being singled out, as is a gap between federal and state highway funding periods that has slowed down some bridge repair and replacement work.
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),
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