RMDAS Figures Show Ferrous Scrap Holding Steady

Scrap processors and steel mill buyers bought and sold scrap in June at pricing nearly identical to the transactions that occurred in May.

Transaction pricing compiled by Management Science Associates Inc. (MSA) for its Raw Material Data Aggregation Service (RMDAS) showed national spot market buyers paying within $10 per ton on average in June of what they paid in April for all grades of ferrous scrap. To view the June numbers click on the link)

Price differences of $9 or $10.per ton marked the extreme during a month when in the Northern and Midwestern United States, mill buyers most commonly paid within $4 per ton in June of what they paid in May.

The end result for national averages as compiled by RMDAS in June was spot buyers paying $3 per ton more for shredded scrap, $3 per ton less for prompt grades and $2 per ton more for No. 1 Heavy Melting Steel (HMS).

Prompt grades, even with the slight dip, retained the greatest average value on the spot market at $226 per ton, followed closely by No. 2 Shredded Scrap at $217 per ton and No. 1 HMS at $190 per ton.

Regionally, spot buyers in the South in June paid above the national average for all three grades of ferrous scrap, and June pricing for all three grades in the South moved upward from where it had been in May.

The difference between pricing in the South and the RMDAS North Midwest region shows spreads in June that all favor the North Midwest mill buyers. Buyers in the South paid, on average, $15 per ton more for prompt grades, $15 more per ton for shredded scrap and $8 per ton more for No. 1 HMS.

The overall direction of the steel industry remains unclear, although global statistics for May have offered the first bit of encouraging data in a while.

World crude steel production for the 66 countries reporting to the Brussels-based World Steel Association has been reported as 95.6 million metric tons in May, a 7 percent increase over the 88.9 million metric tons produced in April.

That positive step does not alter comparisons to one year ago, when in the first half of 2008 the world was producing steel at a record clip.

Compared to output in 2008, steel production remains lower. The May 2009 total is 21 percent lower compared to the 121 million metric tons of steel produced in May of 2008.

China’s crude steel production for May 2009 was 46.5 million metric tons, .6 percent higher than that nation’s output for May of 2008.

But China was an exception in terms of May 2009 vs. May 2008 figures:

• Japan’s output was down by 38.5 percent compared to the same month last year
• South Korea showed a decrease of 11.8 percent
• Germany’s crude steel output was down 47.8 percent in May 2009 vs. May 2008
• Spain produced 41.3 percent less steel than in the same month last year
• The United States produced 4.3 million metric tons of crude steel in May 2009, a decrease of -50.6 percent compared to the same month last year
• Russia’s crude steel production for May 2009 was 4.7 million metric tons, a decrease of 31.2 percent compared to May of 2008.
• Turkey’s decline was less steep, down 16.1 percent in May 2008 vs. May 2009.

Year-to-date, world crude steel production for the first five months of 2009, as calculated by WorldSteel, was 449 million metric tons, a 22.4 percent decrease vs. the same period of 2008.

China’s production of 217.2 million metric tons of crude steel for the first five months of 2009 shows a slight increase of 0.4 percent vs. last year and for 2009 makes up close to half of the global total.

Nearly every other major steel-producing country has shown a decrease for the first five months of 2009 compared to 2008. However, most major steel-producing nations, including the United States, Germany and South Korea, produced more steel in May of this year than in April. Output in the United States moved up by 8 percent in May compared to April.

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.