Spot Buyers Pay More for Ferrous Scrap in June

After two months of declining in value, ferrous scrap prices rebounded by about $15 per ton during the June buying period.

Steel mill buyers on the spot market in June returned to paying more than $500 per ton for prompt scrap grades of ferrous scrap, according to the Raw Material Data Aggregation Service (RMDAS) of Management Science Associates (MSA), Pittsburgh. Click here to view the chart

The national averages calculated by RMDAS showed prompt industrial composite grades (No. 1 busheling, No. 1 bundles, and No. 1 factory bundles) selling for $508 per ton during the June buying period.

The $15 hike in prompt grades nationally was joined by a $16-a-ton rise in prices paid for No. 2 shredded scrap and a $14 per ton increase in prices paid on the spot market for No. 1 heavy melting steel.

Steel mills in the United States held steady in their output in mid-June. The American Iron and Steel Institute reports that in the week ending June 11, 2011, raw steel production was at 1.84 million tons, with a capability utilization rate of 75.3 percent.

That rate of production was up 0.6 percent from the previous week (ending June 4, 2011), when production was 1.83 million tons and the capability utilization rate was 74.8 percent.

Judging by numbers gathered for the first four months of 2011 by the U.S. Department of Commerce’s Census Bureau, the export market stands ready to absorb ferrous scrap shipments as well.

From January through April 2011, the value of ferrous scrap exported from the United States was $3.1 billion, a 43 percent increase in value from shipments in the first four months of 2010.

Part of that increase can be explained by per-ton pricing that has been higher in 2011 than in 2010, but the increase in value has only been by about 25 percent.

The nation that has received the largest increase in scrap shipments from the United States (by value) in 2011 has been Turkey, which is likely because of increased ferrous scrap purchases.

Turkey’s largely electric arc furnace (EAF)-based steel industry produced 13.5 million metric tons of steel in the first five months of 2011, a 23 percent leap compared to the 11 million metric tons it produced in the same period in 2010.

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.