Ferrous market might finally rebound

After seven months of continuously declining prices, ferrous scrap shippers might finally see prices move in their favor in December. That is the tentative conclusion of late November surveying and reporting being conducted by Davis Index.

Prices for prompt grades that reached more than $740 per ton this March plunged to less than $370 on average in the United States by late October. While demand for scrap will not necessarily rise dramatically in December, buyers might finally have run into tight supply limitations, with some of them expecting to ask from $10 to $30 more per ton for prompt scrap in early December, the metals information service reports.

Perhaps surprisingly, obsolete grades (shredded and heavy melting steel, or HMS) might not see a price rebound in December, despite winnowing supplies. Davis Index says sellers of these grades are anticipating a flat market in early December.

The loss of value for prompt scrap has been a curious storyline in 2022. The Raw Material Data Aggregation Service (RMDAS) of Pittsburgh-based MSA Inc. had the grade dipping down to a national average price of $357 per ton in the buying period from Oct. 20 to Nov. 19 of this year.

That figure represents a 54 percent plunge in value for the secondary commodity from its $776 per ton RMDAS peak in early April of this year. The $357 national average for prompt scrap in the most recent trading period also gave it a value $10 per ton below that of shredded scrap, which maintained a $367 per ton price, per RMDAS calculations.

If prices for obsolete grades rise in December, it might be most noticeable in export markets, according to Davis Index. The metals information service says shippers on the East Coast and Gulf Coast are expecting competitive bidding for HMS and shredded grades from overseas buyers.

The domestic steel market has operated at a reduced rate throughout most of 2022 compared with last year, contributing to the frigid market for scrap. The Washington-based American Iron and Steel Institute (AISI) says U.S. steelmakers have made 5.2 percent less steel year-to-date, representing a decline of about 4.4 million tons of output.

In the most recent week ending Nov. 26, AISI says domestic steel production was down 11.1 percent compared with the same week last year, with mills now operating at just 72.8 percent of capacity.