RMDAS Ferrous Scrap Pricing: Prompt Attention

May buyers confronted with leap in prompt grades pricing.

In a market where grades of ferrous scrap had been moving roughly in concert (mostly up) this year, May buying patterns marked a sharp change. Spot buyers in May have been able to buy shredded scrap and #1 heavy melting scrap (HMS) for about the same price as 30 days earlier. Prompt industrial grades, on the other hand, have jumped another $100 or more. (Click here to view the full list of prices May Prices.)

 

While shredded scrap and #1 HMS traded at levels ranging from $1 to $22 per ton different from the month before, spot buyers of prompt grades paid an average of $102 to $124 per ton more. Regional aggregated spot market prices compiled by Management Science Associates (MSA), Pittsburgh, through its Raw Material Data Aggregation Service (RMDAS), show mills paid in a range of from $678 to $720 per ton for the new production scrap used to define the RMDAS Prompt Industrial Composite grade.

 

Regionally, buyers in the North Central/East region (which includes the Northeastern United States as well as Ohio and most of Indiana) faced the highest prices, with mills paying an average of $720 per ton for prompt industrial grades and $517 per ton for #1 HMS.

 

Despite the enormous leap in the value of prompt grades, buyers in the RMDAS North Midwest region actually paid $3 per ton less on average for shredded scrap.

 

Speculation on the huge disparity has centered on stagnant industrial scrap production, particularly in the Midwest, where both the automotive and home appliance industries are generating less scrap.

 

The Midwest auto industry has been hit particularly hard by a continued shift away from the SUVs and passenger trucks produced there in favor of smaller cars with better fuel economy.

 

Likewise, makers of large home appliances with production facilities in states like Ohio, Indiana and Michigan have slowed production in response to the stagnant national market for new homes.

 

Some scrap buyers and sellers are also anxious to see whether the presence of EAF steelmakers Nucor and Steel Dynamics Inc. in the market is resulting in restricted availability of prompt grades on the spot market, particularly in cases where those firms have service contacts at assembly plants.

 

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 Ralph Pinkert at 773-588-1199 or via e-mail at RPinkert@MSA.com.