Even without severe winter weather playing a major role, domestic steel mills paid up to $39 per ton more on the spot market for ferrous scrap in January compared to the month before.
According to the monthly averages issued by the Raw Material Data Aggregation Service (RMDAS) of Management Science Associates (MSA), Pittsburgh, mill buyers paid an average of $34 per ton more for shredded scrap in the January 2012 buying period, which includes the first 20 days of the month. (Click here to see January RMDAS prices.)
The price increases caused RMDAS Prompt Industrial composite grade (consisting of No. 1 busheling, No. 1 bundles and No. 1 factory bundles) to rise to $516 as a national average, placing it at $500 or above for the first time since October 2011.
The other two common ferrous grades summarized in the RMDAS report (No. 2 shredded scrap and No. 1 heavy melting steel [HMS]) also moved up in price, but maintained a national average below $500 per ton in January.
By region, prices in the South—which had experienced the smallest price gain in December—gained the most in average value in January. In the South (consisting of Alabama, Arkansas, the Carolinas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee, Texas and western Virginia), each of the three major grades advanced by more than $30 per ton on the spot market, with No. 1 HMS rising $39 per ton.
Regarding scrap generation, a recycler near the U.S.-Mexico border manufacturing region says the generation of material remained hectic even through the holiday season, especially in the automotive sector.
The North American auto industry continues to enjoy a modest rebound, with some 12.8 million passenger cars and light trucks sold in the United States in 2011, up substantially from the doldrums of just 10.4 million vehicles sold in 2009. An analyst quoted by Forbes magazine in mid-January has forecast sales of 13.5 vehicles sold in the United States in 2012.
A Northeastern scrap recycler comments that an unusually mild winter (as of mid-January) also was helping to keep scrap flows steady, as have healthy scale prices for both ferrous and nonferrous scrap.
A processor in the Midwest says while spot prices offered by mills surged the first few days of January, by the middle of the month spot prices were softening considerably. He says he anticipates that most ferrous grades will drop by $20 per ton or more in the February buying period.
On the demand side, 2012 has started out on an encouraging note for North American steel mills. In the week ending Jan. 14, 2012, mills in the United States operated at 76.2 percent of capacity, according to the American Iron and Steel Institute (AISI). That level is above the 2011 same-week rate of 73.2 percent, but down slightly (0.4 percent) from the previous week.
Globally, figures from the WorldSteel Association showed a rebound in December 2011 after a somewhat troubling drop in production compared to the month before. The world’s steel producers manufactured more than 117 million metric tons of steel in December—historically a slower month—exceeding the November figure of just 115.5 million metric tons.
China’s renewed steel production was a major reason for the resurgence, as that nation’s production rose from 49.9 million metric tons in November to 52.1 million metric tons in December. North American steelmakers also rebounded (by about 250,000 metric tons of output, or about 2.5 percent).
European steelmakers, on the other hand, witnessed their second straight month of decline. After producing about 1 million metric tons less in November compared to October, European producers slumped by another 1.7 million metric tons in December. Steelmakers in Europe who produced nearly 15.3 million metric tons in October had an output of just 12.5 million metric tons in December—a drop of 18 percent.
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 Jeralyn Brown at 724-265-6574 or via e-mail at JBrown@MSA.com.