Ferrous

Taking part in a ferrous scrap market that remains historically strong, dealers experienced renewed interest in material from mills in December—causing prices to head back up for the month.

Melt schedules at mills have remained steady even after Thanksgiving and heading into December. According to statistics from the American Iron and Steel Institute (AISI), steel mills in the United States produced more than 2 million tons of steel in the last two weeks of November as well as the first full week in December.

That compares to output that ranged from 1.7 million to 1.8 million tons per week in December of 2006 or in the first full week of January in 2007.

Contacted in early December, scrap processors remarked that rather than cutting back on orders heading into the holiday season, domestic mills were beginning to buy more aggressively. "There are mills coming into the market for more tons at a time of year when they used to buy fewer," notes a recycler in the Great Lakes region.

A recycler in the upper Midwest is likewise receiving strong demand signals. "There is a lot of scrap leaving the country and domestic mills need material to melt also," he remarks.

He predicts the situation on the demand side will probably carry over into 2008. "Prices have been firm and it looks to me that we’re going into a fairly strong 2008, at least for the first quarter."

The demand side of the equation alone might have been enough to cause the market to experience $20 to $30 per ton price gains in December. But a combination of foul weather and short work weeks also presents the prospect of pinched supply.

Obsolete scrap can perhaps help with the shortfall, although severe weather can hamper that flow as well. Some recyclers are confident that spigot will remain open.