Ferrous Department

Scrap dealers throughout North America are reporting that by the end of March, mill buyers were unanimously making lower offers for ferrous deliveries.

The consensus seems to be that a ceiling was reached in early March after a nine-month run-up in prices, with particularly strong pricing gains in the last five months.

Per-ton prices are expected to drop anywhere from $25 to $40 in April and May, although buyers and sellers alike note that sudden purchase orders from East Asia could revive momentum back toward higher prices.

In April ferrous scrap buyers found themselves needing to purchase enough scrap to fill orders, but not wanting to get caught with high-priced inventory. "Increased scale pricing has sparked the flow," says one Southern dealer, "but it’s to a point where it’s almost alarming . . . but if prices drop, you don’t want to get caught with high inventory."

Should demand remain strong, concerns about adequate supply may return. The high prices of the past several months certainly brought out obsolete scrap, but how much remains in hiding is uncertain.

Economists’ numbers are indicating a revival of the North American manufacturing sector, though increases in generated scrap appear to depend on the geographic region. High prices and occasional difficulties securing finished steel may also be affecting some manufacturer’ plans.

"You’re seeing small companies get hit harder—we need stability in pricing," one scrap buyer says. "After buying steel, manufacturers are having problems passing on their costs to customers."

In the meantime, dealers remain active buying and selling ferrous scrap in a price range well above its historic average.