Ferrous Department

Slow Motion

Light volumes of ferrous scrap coming in and reduced orders going out continue to describe markets throughout North America.

Industrial generation remains slow in many markets, while demand for scrap is light enough that prices at bids and auctions began falling back again in mid-September.

"The industrial accounts business isn’t very good," says a Midwestern processor, who as of late September sees few signs of increased activities at generating sites.

As far as obsolete scrap, one Pennsylvania auto dismantler says salvage yard operators who have the room will continue to hold on to car bodies in an attempt to ride out the down market. "Some of these guys just don’t have room to stack any more, and others need the cash coming in, even if it is a lot less than they’re used to."

Markets are not likely to get a lift from the demand side any time soon. "A lot of mills have curtailed their intake," notes the Midwestern processor, "and some foundries really haven’t taken any scrap since June."

The light mill melting schedules and lack of generated factory trimmings are combining to keep scrap operations both less busy and less profitable. With scrap markets considered a leading economic indicator, the prospects for overall economic recovery any time soon seem dim, the processor notes.

Additionally, as long as automakers and other manufacturers buy their sheet steel at rock bottom prices, scrap dealers are going to have a hard time commanding higher prices from mills, one Great Lakes region dealer speculates. "The automotive companies have the big hammer now. They’re squeezing all the steel sheet makers, who are getting hammered on their margins and profits, and then it’s our turn to get squeezed."

As long as that cycle remains in place, increases of just a couple of dollars per ton each month may be all ferrous dealers have to look forward to.