Stability was the most common trait for ferrous scrap prices for the seventh consecutive month, although most grades in most regions experienced a slight downward tilt in October.
October spot pricing for ferrous scrap showed slight variations from September, but stayed in the same narrow range in which it has been since April 2011. By late October, some recyclers were expressing concern about declining melt rates at domestic mills, but purchase prices seemed to indicate that demand has been sufficient enough to keep the market stable. (Click here to view the most recent figures.)
Data collected and a summary distributed by the Raw Material Data Aggregation Service (RMDAS) of Management Science Associates (MSA), Pittsburgh, showed national averages in October staying within $6 per ton of the September figures.
The largest variation within the three RMDAS geographic regions was in the North Midwest region (Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, Wisconsin, the Dakotas and northwest Indiana), where mill buyers were able to pay $10-per-ton less for No. 2 shredded scrap.
Mills in that region were able to pay less for each of the three commonly traded forms of scrap tracked by RMDAS (No. 2 shredded, No. 1 Heavy Melting Steel (HMS) and the Prompt Industrial Composite grade, consisting of No. 1 busheling, No. 1 bundles and No. 1 factory bundles.)
The only grade for which mills paid more in any given region was for prompt grades in the South, which gained $3 per ton in value.
A Midwestern scrap processor indicated that flow had started to slow down somewhat in October. He attributed it in part to declining copper prices, which were causing some scrap generators and peddlers to hold onto all their scrap in the hope that the copper price would rebound soon.
The same processor speculated that steel mills in winter weather regions may have reduced their scrap buys in October with the goal of suppressing the price of ferrous scrap before they have to make their pre-winter inventory build-up purchases.
Steel output in the United States took a dip in early October, but regained momentum later in the month, according to the American Iron and Steel Institute (AISI), Washington, D.C.
In the week ending October 15, 2011, domestic raw steel production was 1.86 million tons, with mills running at a capacity utilization rate of 75.1 percent. That figure is up 14.3 percent from the 1.63 million tons made during the same mid-October week in 2010, while the capacity utilization rate then was 67.3 percent.
The figure for Oct. 15, 2011, also is up 1.6 percent from the previous week when production was at 1.83 million tons.
The slight setback in early October was unwelcome in a calendar year where steelmaking in the United States has been gaining some momentum. According to an AISI summary of the first 8 months of 2011, steel shipments over the first eight months of 2011 totaled nearly 60.5 million tons, an 8 percent increase compared to 2010 shipments in the same time span. At that output level, shipments from domestic steel mills would total 91 million tons at year’s end.
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.