Ferrous

STILL IN A GOOD SPOT

Hanging a new calendar on the wall has not seemed to usher in a new supply-and-demand dynamic for ferrous scrap, as pricing remains strong in the first month of 2007.

Steel mill buyers were paying anywhere from $19 to $34 per ton more for the most common ferrous scrap grades in January purchases recorded throughout the United States.

The amounts varied by region, but all grades showed price gains, according to figures compiled by the Raw Material Data Aggregation Service (RMDAS) of Management Science Associates Inc. (MSA), Pittsburgh.

Nationally, mill buyers paid $27 per ton more on average for prompt industrial No. 1 busheling and bundles, $24 per ton for No. 2 shredded scrap and $23 per ton for No. 1 heavy melting scrap (HMS).

Combined with December gains, processors and shippers of ferrous scrap are seeing healthy increases that could be reflecting both seasonal availability of scrap because of foul weather and the need for mills to build back some inventory after an autumn of less frequent buying.

The trend is dramatically different from what was occurring in January of 2006, when the year started off with a thud as far as those favoring higher prices were concerned.

In January of 2006, mills paid $19 less per ton for No. 2 shredded scrap, reflecting what would turn out to be a low point in the market for the entire year.

Recyclers with orders to fill have begun to adjust their scale prices upward, although one scrap recycler based in the Eastern United States says the adjustment may not be necessary.

The combination of lower fuel costs and the continuation of historically high nonferrous scrap prices is keeping peddlers committed to finding scrap at the street trade level. (An unfortunate side effect: The theft of metal products also continues at unwelcome historic levels.)

The Eastern recycler notes that after his ferrous shear went down, the January price spike allowed him to sell some unprepared plate and structural scrap at a high enough price that he was able to ship profitably through his downtime.

As 2007 begins, it appears as if lofty prices will continue to allow scrap recyclers to operate on margins and spreads that can allow for such occasional mishaps.

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

PSC Metals Inc., based in Mayfield Heights, Ohio, has announced the acquisition of the ferrous and nonferrous assts at the Akron and Barberton, Ohio, yards of Ravenna Salvage Inc., also known as Akron Recycling.

The deal continues the steady move by larger scrap metal recycling firms to acquire operations. Over the first few weeks of 2007, several large-scale acquisitions have been made in the Midwest, with OmniSource, Alter Trading and Ferrous Processing and Trading all making strategic acquisitions to strengthen their coverage of the region.

According to Benjamin Blemker, president and CEO of PSC, the two facilities will provide additional volume for the company’s new Canton, Ohio-based "super" shredder and better position the company to supply quality products to key scrap consumers across the region.

Blemker says the acquisition also will complement PSC’s recent investments in its Canton and Cleveland nonferrous operations.

Akron Recycling’s owner Don Schnackel retains the iron-processing business, to be called Akron Iron & Metal LLC.

The Timken Co. will invest about $60 million in its steel rolling mill operations to increase the company’s capability to produce differentiated steel products.

The investment will enable Timken to competitively produce steel bars down to 1-inch in diameter for use in power transmission and friction management applications for a variety of customers, including the rapidly growing automotive transplants.

"We are making investments across our company to strengthen the differentiation of our technology and product portfolio," says James Griffith, Timken president and CEO. "The expansion of our small-bar steel capabilities is part of our strategy of managing our company for value and taking advantage of strong market opportunities to improve our ability to create shareholder value throughout the economic cycle," he adds.

A 76,000-square-foot addition will be built at the Harrison Steel Plant in Canton, Ohio. The project will include expanded rolling, finishing and inspection capabilities. Construction is expected to begin in mid-June, with completion expected in mid-2008.