RMDAS Ferrous Scrap Pricing: Remaining Aloft

Steel mills in the United States paid slightly less for ferrous scrap in February, with grades averaging decreases of from $8 to $21 per ton, depending on the region. Throughout the United States, grades moved nearly in unison, with the national average for prompt industrial grades down $13, for shredded scrap down $12 and for HMS #1 down $12. (Click here to view the full list of prices February Prices.)

Reported regional aggregated spot market prices compiled by Management Science Associates (MSA), Pittsburgh, through its Raw Material Data Aggregation Service (RMDAS), show per-ton prices down from roughly $10 to $20 per ton for different grades in different regions. But at from $330 to $405 per ton, pricing remained at levels considered un-attainable just three years ago.

Mills throughout the United States continued to pay fairly comparable amounts for their scrap, indicating a flattening of regional differences. The widest spread for any single grade was a $14 per ton average difference paid for shredded scrap in two different regions.

In the RMDAS North Central/East region, mill buyers paid an average of $385 per ton for #2 shredded scrap (more than .17 copper content) while buyers in the North Midwest region paid $371 on average for this same grade.

The $400 per ton benchmark continued to be surpassed for the RMDAS prompt industrial composite (#1 busheling and #1 bundles) grade, with buyers in the South region paying an average of $408 per ton.

How long can such pricing be sustained? Predictions are by their nature speculation, and both buyers and sellers of ferrous scrap seem to agree that since the market is in places where it has never previously been, trying to predict where it will go next is particularly impractical.

The wild card remains the global economy and the export market that is tied into it. When the North American economy was in the driver’s seat, housing and auto slowdowns at the same time equated to sputtering steel output and rock bottom scrap prices.

But what is happening so far in 2008 is very different, with strong Asian economies being the likeliest reason. (Steelmaking capacity that is more genuinely in line with domestic demand is another factor cited by some observers.)

If export demand for finished steel begins to mirror that for ferrous scrap, there may be very little cause for downward pressure on scrap prices anytime soon.

One recycler who would venture a guess is inclined to think that a domestic economic slowdown will eventually have an impact. “I don’t think prices will tank in the next few months, but if housing and domestic manufacturing doesn’t pick back up, I think something like a 20 percent price decrease is likely before the end of the year,” he ventures.

In the meantime, the scrap market has been one of the few sources of heat during a chilly winter for the U.S. economy.

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.