A glimmer of hope in the new year

As winter storms hit portions of the United States, recycled steel sellers finally were able to get more per ton in the January buying period compared with the prior month.

According to Davis Index, in the first half of January, average prices paid by domestic mills increased by $20 per ton or more in several U.S. regional markets.

A Jan. 13 report from Davis Index says prices for all benchmark grades settled at $20 per gross ton above December 2024’s settled prices, including incentives, corrections and premiums for certain grades.

In addition to transportation woes, two winter storms reduced scrap-generating demolition and construction activity in a wide stretch of the South in January.

The average gain was nearly identical for No. 1 heavy melting steel (HMS), shredded and No. 1 busheling (prompt) benchmark, and Davis Index reports higher bids in markets including Chicago, Cleveland and Birmingham, Alabama.

While the price of prompt scrap, such as No. 1 busheling, can move differently when overseas buyers are active in the obsolete grade markets, in January, prompt scrap pricing followed the same pattern as shredded and cut grades—often rising by $20 per ton on average in the domestic market.

According to Davis Index, domestic mill buying discussions in the first and second weeks of January revealed a situation in which several mills in the U.S. needed to rebuild their scrap inventories. Those discussions were occurring at the same time ferrous scrap generation, collection and trucking were facing obstacles caused by winter weather.

Some of the regional purchases exceeding the $20-per-ton average included a $30-per-ton boost for machine shop turnings in Cleveland and a $28-per-ton increase for the same grade in Birmingham.

While some processors were willing to sell in January at the same per-ton prices as the previous month, others signaled they were likely to withhold tonnage from sideways bids after rumors of $20-per-ton increases began to circulate.

Davis Index predicted that because steelmakers want to restock several mills nationwide, buyers might refuse to increase prices before eventually correcting their position.

Weather could have played a role in disrupting a previously existing supply-demand balance. Some of the worst weather hit areas in the South that typically are the least prepared to cope with snowfall.

Mills in that region were seeking inventory at the same time winter storms were snarling traffic and recycling collections in parts of the mid-South, Ohio Valley and the Mid-Atlantic.

An early January storm affected flows from Kansas to Maryland, while just a few days later, another storm moved from New Mexico to the Mid-Atlantic.

The second storm brought slick and closed roads to several areas in Arkansas, Tennessee, the Carolinas and Atlanta.

In addition to transportation woes, the storms reduced scrap-generating demolition and construction activity in a wide stretch of the South. Thus, outdoor jobsites that already had been slowed by holiday schedules further were delayed by severe winter weather.

The Washington-based American Iron & Steel Institute (AISI) reports that through Dec. 28, 2024, domestic mills made slightly more than 87 million tons of steel. That figure represents a 2.5 percent decrease from the more than 89.2 million tons produced in 2023 (not including the final three days).

Perhaps predictably, according to AISI, the holiday period restrained domestic steel output.

In the week of Dec. 28, U.S. output was down 1.9 percent from the previous week. Domestic steel output then fell another 1.4 percent the following week, which included New Year’s Eve and New Year’s Day.

As of the second week of January, the recycled steel export market was thought to be unlikely to add to upward price pressure, according to Davis Index.

The metals recycling industry watched carefully as a potential work stoppage threatened to slow outbound traffic at ports in the U.S. Northeast and South. However, a tentative settlement announced toward the end of the first full week of January between the International Longshoremen’s Association and United States Maritime Alliance is poised to eliminate that risk factor.

Even when a strike loomed, bulk shipments of HMS from New York were trading at $315 per metric ton—below what the grade had fetched in December.

On the West Coast, selling prices likewise remained suppressed. Davis Index reported HMS bulk cargoes leaving from Los Angeles at $306 per ton in mid-January, a lower price compared with the prior month.