Ferrous

After retreating for two consecutive months, prices paid by mills for ferrous scrap rebounded in early December, providing hope for processors who like to see higher prices that can bring out more scrap.

With 2006 pricing concluded, the year can officially go into the books as a remarkable one.

Using Management Science Associates’ (MSA) Raw Material Data Aggregation Service (RMDAS) pricing as a yardstick, average mill prices for shredded scrap never fell below $200 per ton.

Although there was some volatility (average monthly prices for MSA’s No. 2 shredded scrap grade ranged from $222 to $277), the average price for shredded scrap never fell below $200 per ton and never soared to $300.

Throughout the year, processors reported good flows of material, with scale prices almost always attractive enough to bring out the auto bodies, appliances and other obsolete scrap that shredder operators in particular crave.

Construction and demolition activity in 2006 remained strong, especially in the metals-intensive non-residential and infrastructure categories. According to figures maintained by McGraw-Hill Construction, activity in the non-residential construction segment had grown by $18 billion in contract values through October 2006 compared to the same 10 months of 2005.

Similarly, the infrastructure (highways, bridges, utilities) segment had grown by more than $15 billion in contract values year-over-year. For many scrap processors, the growth in these scrap-rich construction segments helped offset a housing market that was slowing by some $30 billion in contract values during 2006, compared to 2005.

Another rich source of scrap throughout 2006 proved to be the oil and gas exploration segment. Scrap recyclers in parts of the country where there is fossil fuel to be tapped saw growing amounts of those grades move into their facilities throughout the year.

As the calendar turns, recyclers are hearing reports of copper losing some of its value on trading floors, causing some to predict that while an overall drop in metals prices never did send them reeling in 2006, it is almost certain to happen at some point in 2007.

(Additional News about ferrous scrap, including breaking news and consuming industry reports, is available online at www.RecyclingToday.com.)

Reported regional aggregated spot market prices per gross ton shown for each commodity are based on all Management Science Associates’ (MSA) Raw Material Data Aggregation Service (RMDAS) participants’ actual order data submitted to and processed by MSA as of the 20th of each respective "buy month," rounded to the whole integer. A map of RMDAS regions is available at http://rmdas.msa.com, as is a further explanation of RMDAS methodology and an accompanying disclaimer.

No. 2 Shredded Scrap is defined as containing .17 percent or greater copper content. The Prompt Industrial Composite consists of an average of No. 1 bundles and No. 1 busheling. Additional pricing information on each grade can be found at www.RecyclingToday.com.

© 2006 Management Science Associates Inc. All rights reserved RMDAS is a trademark of Management Science Associates Inc.