RMDAS Ferrous Scrap Pricing: Split Personality

For the second consecutive month, ferrous scrap markets demonstrated a split personality, with prompt grades surging in price while obsolete grades actually moved backwards.

It was another record-breaking month for prompt grades, with the RMDAS prompt industrial composite grade averaging $780 per ton nationally. Shredded and No. 1 HMS scrap, however, moved downward $18 to $20 per ton. Click here to see the June figures -- June RMDAS

Spot market prices compiled by Management Science Associates (MSA), Pittsburgh, through its Raw Material Data Aggregation Service (RMDAS), demonstrate the contrary supply situations of new production scrap (used to define the RMDAS prompt industrial composite grade) versus obsolete scrap that is generally fed into shredders or included in the No. 1 HMS grade.

Mill buyers in the RMDAS North Central/East paid an average of $787 per ton for prompt grades compared to just $501 per ton for #1 HMS. In the South, buyers paid less just $465 per ton for #1 HMS and $717 per ton for prompt grades.

“The difference in prime and obsolete [pricing] continues to widen,” observes one scrap buyer. He says that a look at inventories at scrap yards point to the difference. “Some of the shredders are overrun with material—they can buy all that they want,” he notes.

The situation, if not unprecedented, is certainly uncommon. “Historic knowledge goes out the window because the need for prime scrap is out the window,” remarks the recycler. “Mills continue with high demand; it’s great as long as you can produce the scrap.

Global mill demand remains intense. Figures for May compiled by the IISI (International Iron and Steel Institute), Brussels, show nearly 120 million metric tons of steel were produced that month, with a staggering 46 million tons of that made in China. China’s production was up 10.5 percent compared to the month of May 2007.

Speaking to delegates at the Bureau of International Recycling (BIR) Ferrous Division session, which took place in early June in Monte Carlo, Anton Van Genuchten of Germany’s TSR GmbH & Co. remarked, “Only one thing can stop this demand [for scrap], and that is an end in demand for steel products.”

Van Genuchten and other panelists pointed to the healthy operating environment for steelmakers as a key reason for record-high pricing.

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.