Ferrous

Shutdowns of electric arc furnace (EAF) mills such as GST Steel Co., Kansas City, Mo., and Trico in Alabama are causing some disruptions in trading patterns.

Unlike situations with mills attempting to work through bankruptcies, the shuttering of these facilities has forced scrap processors in those regions to not just change credit terms, but to quickly find new destinations for ferrous scrap.

Reduced melting capacities at most other mills have made the scramble all the more difficult. Lackluster export markets also offer little help. A processor in eastern Texas notes, “there is more scrap going up the river, rather than staying in the South or going out to export from New Orleans.”

Several processors comment they are concentrating more on specialty foundry grades as a means of ensuring markets for scrap. But such a strategy is not a cure-all, warns one processor, who says quite a few foundries are now popping up as credit risks as well.

One Atlanta area dealer says the Trico closing sealed off one market, and concerns regarding the status of Birmingham Steel have him and other Southern processors worried.

The Birmingham, Ala.-based mini-mill operator has cited higher energy costs and difficult steel industry conditions as reasons for its most recent quarterly loss of $10.9 million (35 cents per share), for the quarter ending March 31. The company’s net sales also dropped by 21% compared to the same three-month period in 2000.