September RMDAS Pricing Brings Lower Numbers

Pricing in the ferrous scrap spot market has dropped from $293 to $157 per ton in September, depending on the grade. Prompt industrial grades have fallen the hardest, losing more than $302 per ton in value in the North Midwest region. (Click here to view the prices for September, 2008)

Transaction pricing compiled by Management Science Associates Inc. (MSA) for its Raw Material Data Aggregation Service (RMDAS) showed national averages for prompt grades dropping an average of $293 per ton in September compared to August.

Scrap shippers who held off from selling right after the Labor Day holiday initially did themselves no favors, as mills only came back with offers later in the same week that were even lower than their first offers.

 “Sales are definitely being made at these lower price levels,” said one recycler in the Midwest.”Every hour you waited, the price would get weaker—it would drop an extra $10 or $20 every hour,” he remarked of the days following Labor Day.

However, a recycler interviewed later in the month said mills that came back into the market the week of Sept. 8 began offering a few dollars more per ton. “Mill buyers told us they were going to come back into the market on Sept. 8, and indeed they did,” says the recycler, based in the South. “And they came back in a little bit stronger than initially indicated; I think they met some price resistance with their lowest offers.”

Another recycler reports prices received for #1 HMS in the $300 per ton range, down significantly from average pricing above $500 per ton in the late spring and early summer.

Prices being paid for prompt grades of scrap dropped even faster than those for obsolete grades, as a historically wide gap between the grades appears to be finally closing. “The gap was way too wide,” says one recycler, referring to a price difference of nearly $400 per ton that developed between #1 HMS scrap and prompt industrial grades, as measured by the July and August RMDAS figures.

September spot pricing compiled for RMDAS showed #1 HMS averaging $306 per ton nationally. That still represents a $258 gap between that grade and the average $564 per ton paid for the RMDAS Prompt Industrial Composite (#1 busheling, #1 bundles and #1 factory bundles) grade.

Factors being pointed to for the lower pricing include a continued weakness in overseas demand for America’s ferrous scrap; slower melting schedules at North American steel mills; and a healthy supply of ferrous scrap at processing facilities that is allowing mills to comparison shop extensively on the spot market.

The Southern recycler reports that Turkish buys off of the East Coast have been coming in at around $360 per ton FAS for shredded scrap. Those orders remain less frequent compared to earlier in the year, however.

The recycler speculates that construction projects in the Middle East may be running into cost overruns, tempering the building boom in a part of the world that is largely served by Turkish mills.

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.