Steel mill buyers of ferrous scrap on the spot market paid about $25 less per ton for material in the October buying period, according to transaction pricing compiled by Management Science Associates Inc. (MSA) for its Raw Material Data Aggregation Service (RMDAS). To see the prices for the month click on the following link -- October Prices
Buyers of prompt grades paid $316 per ton on average, down by $23 per ton compared to the average price of $339 paid in September.
Likewise, pricing was down comparably for shredded scrap and number 1 heavy melting steel, with shredded taking the biggest plunge of some $29 per ton as a national average on the spot market.
The October price slide marked the end of an upward pricing trend that had run through July, August and September.
The pricing drops in October were fairly uniform across all three RMDAS regions, with the largest drop ($33 per ton) indicated for shredded scrap in the North Midwest and the smallest move ($21 per ton) seen for prompt grades in the North Central/East (defined by RMDAS as the New England states plus, New York, New Jersey, Ohio, Pennsylvania, Kentucky, Maryland, eastern Virginia, West Virginia, most of Indiana and most of Michigan).
Export demand is considered to have driven much of the upward price movement in the previous three-month period, and some hiccups in that demand are being pointed to by recyclers as the reason for the October price drop.
In particular, scrap buying and overall manufacturing activity in China has been scaled back by two major holidays that fell within three days of each other in that nation. With National Day on October 1 and Mid-Autumn Festival Day falling on October 3, many individuals took much of early October away from work and many industrial businesses scaled back or shut down for a period of time.
Steel producers in the United States may have helped to jump in to pick up some of that slack. Judging by steel production rates calculated by the American Iron and Steel Institute (AISI), domestic steelmakers have been picking up their pace of production in October.
According to AISI, in the week ending October 17, 2009, domestic raw steel production was 1.47 million net tons for a capability utilization rate of 61.7 percent. Production for that week is up 1.9 percent from the previous week, when production was 1.45 million tons and the rate of capability utilization was 60.6 percent.
Those weekly figures are still down from last year (production was 1.68 million tons in the week ending October 17, 2008, while the capability utilization then was 70.5 percent), but upward momentum that has been building through the late summer and early fall continues.
Scrap recyclers are hopeful that export brokers will be increasing their activity during the November buying period while the slow improvement in the domestic market continues.
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.
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