Flat Terrain

Buyers and sellers of ferrous scrap are in the midst of a 60-day period of relatively flat pricing, according to transaction survey data from the Raw Material Data Aggregation Service (RMDAS) that is compiled by Management Science Associates Inc. (MSA), Pittsburgh.

Prompt industrial grades enjoyed a modest price rise of $13 per gross ton (national average) in April, while shredded scrap and No. 1 heavy melting steel (HMS) was purchased, on average, within $5 of its March price.

For the second straight month, pricing for all ferrous grades across all regions was relatively stable in the April 2011 buying period, which RMDAS closed out April 19th.

No. 2 shredded scrap (shred with more than 0.17 percent copper content) was purchased for an average price of $450 per ton on the spot market nationally, down $2 per ton from March.

Although prices for the three grades covered in the RMDAS Index moved in fairly close sync across all three RMDAS regions (North Central/East, North Midwest and South), the biggest mover was the $23 per ton more paid for prompt grades in the South. That region consists of steel mills in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, North and South Carolina, Texas, Tennessee and part of Virginia.

The other grades in that region more closely followed the national trend, with shredded scrap gaining $1 in value and No. 1 HMS losing $5 per ton in value on the spot market.

Ferrous scrap markets were the topic of a Thursday, April 8, session at the Institute of Scrap Recycling Industries Inc. (ISRI) Convention & Exposition in Los Angeles.

Panelists at the Ferrous Spotlight session included Randy Ehret of steelmaker Timken Co., Canton, Ohio. Ehret commented that Timken had recently purchased a mid-sized scrap yard in Akron, Ohio.

Although the company was not certain that it would continue to purchase more yards, Ehret said “there is a logical reason” for a steel company to own a scrap company: “Those [steel companies] who do not have access to assured supply will be at a disadvantage.”

Patrick McCormick of World Steel Exchange, Englewood Cliffs, N.J., remarked that “everyone is concerned about price volatility” in the steel supply chain, from end-user manufacturers to scrap suppliers.

McCormick said he saw a scrap reservoir that was large enough to meet demand for scrap, though it often strains to do so. And in those stretches were demand recedes and prices get lower, China will step in “when [ferrous scrap] is a great buy.”

"World steel production in March 2011 checked in at 129 million metric tons, a figure 7 percent higher than the March 2010 global production figure."

He also noted that China’s ferrous scrap deficit was bound to shrink as obsolete consumer products begin to hit scrap yards there. However, as that point nears, China’s central government may encourage the construction of more electric arc furnace (EAF) steel mills.

John Harris of ArcelorMittal, who works out of Ontario for the Luxembourg-based steelmaker, noted that the scrap market had reduced seasonal mill demand patterns that North American scrap companies used to rely upon.

Harris also warned scrap processors to be sure that their radiation detection devices were in working order, as the possibility exists that contaminated scrap from northern Japan could make its way into the global scrap market.

On the demand side, world steel production in March 2011 checked in at 129 million metric tons, a figure 7 percent higher than the March 2010 global production figure.

That figure also was 11 million tons higher than the amount of steel produced the month before. In February of 2011, the 64 nations tracked by the Brussels-based World Steel Association made 118 million metric tons of steel.

Steel mills in China churned out some 59.4 million metric tons of crude steel in March, some 5 million metric tons more than the country produced in March of 2010.

Many of the world’s other leading steelmaking nations, including the United States, Germany and Spain, reported flat production figures compared to March 2010.

Production in South Korea increased by more than 14 percent compared with the year before, while Japan’s production decreased about 3 percent, perhaps a small decrease considering the damage caused by the earthquake and tsunami there.

(Additional information on ferrous scrap, including breaking news and consuming industry reports, can be found at www.RecyclingToday.com.)