A dose of holiday cheer

Scrap flows remained healthy in October, and more good news arrived in the form of higher bids for ferrous scrap in early November, putting many recyclers in a positive frame of mind heading into the holiday season. Fastmarkets AMM Midwest Index surveyed pricing for the early November buying period showed No. 1 busheling (prime) heading north of $600 per ton again after dipping below that benchmark in October.

Perhaps even more encouraging for processors who shred and bale obsolete scrap, the value of shredded scrap and No. 1 heavy melting steel (HMS) in the Midwest rose more per ton than the prime grade did in November.

According to Fastmarkets AMM, while prompt scrap rose about $18 per ton in November, ferrous shred gained an average of $54 per ton, and No. 1 HMS rose by about $43 per ton.

Prices rose despite steady supplies of scrap flowing into yards, at least according to two processors Recycling Today contacted. “Supplies have met demand,” says one processor in the Midwest.

“Flows have been good for us. Peddlers are pretty steady in this kind of market. We can’t complain.” – a scrap processor based on the East Coast

“Flows have been good for us,” a processor on the East Coast says. “Peddlers are pretty steady in this kind of market. We can’t complain.”

That same processor says some of the smaller dealers who supply his larger yard might “push the mills a bit” in hopes of a $500 per ton market for HMS, which right now sits closer to $480 per ton, according to Fastmarkets AMM pricing.

The export scene in November also featured rising prices, with HMS gaining $42 per ton on the East Coast and $63 per ton on the West Coast, according to Fastmarkets AMM surveys.

The processor in the Midwest says the market in his region is attempting to gauge how Cleveland-Cliffs’ acquisition of Detroit-based Ferrous Processing & Trading (FPT), which closed Nov. 17, will play out. Cleveland-Cliffs CEO Lourenco Goncalves was clear in announcing the acquisition that his steelmaking firm purchased the company in part because “FPT has a very meaningful presence in prime scrap, [and] with all the new flat-rolled EAF (electric arc furnace) capacity coming online in our market over the next four years, prime scrap will only become more and more scarce.”

The Midwest recycler says in the first buying period in the month after the acquisition, processors were watching to see if the Cleveland-Cliffs Dearborn, Michigan, mill would affect the market. There was an impact, the processor says, “Just not what we thought we would get. Instead of coming in and wanting more prime scrap, Cliffs bought zero. I believed they would be a monthly player, but it looks like it is going to be some time before we know what their intentions are.”

Although trade publications were speculating ferrous pricing momentum would hold its gains or even rise some more in December, conditions on the demand side could begin to play a role before the start of the December buying period.

Weekly steel production figures from the Washington-based American Iron and Steel Institute (AISI) were pointing to a slight slowdown in output in late October and early November.

In the week that ended Nov. 6, U.S. raw steel production of 1.84 million tons declined 1 percent from the previous week ending Oct. 30, when production checked in at 1.86 million tons. The dip in production continued a trend that started the week ending Oct. 23, when output declined 0.6 percent from the previous week. That was followed by a 0.5 percent drop in the week ending Oct. 30.

Political events also could play a role in American steel output moving forward, pertaining to an agreement to allow some European steel into the U.S. tariff-free and the long-awaited passage of an infrastructure spending bill.

AISI has expressed approval of both political moves, thanking the Biden administration officials for the agreement with the EU, saying it will help ensure that the U.S. can “work to develop a renewed partnership with the EU to address global steel excess capacity.” AISI also says the infrastructure bill eventually will boost demand for U.S.-made steel.

Regarding the Infrastructure Investment and Jobs Act, AISI President and CEO Kevin Dempsey says, “American steel built this country, and the industry is now ready to get to work on rebuilding this country. Repairing and modernizing our national transportation system is essential, and we are glad Congress agrees. This bill would ensure that our infrastructure system meets the need of the 21st century.”

Dempsey continues, “This bill will make sure that taxpayer funds are used to procure cleaner steel produced in the United States, where it is made with a lower carbon and energy intensity than steel made in the other leading steel-producing countries.”