Ferrous News

Slow and Slower

The seasonal slowdown that has come to be expected at the end of each calendar year has hit the ferrous scrap industry with a vengeance.

In addition to seasonal slowdowns, the dumping of steel, steel products and ferrous scrap into the U.S. market from international sources is also being blamed for the lack of ferrous scrap orders being received.

U.S.-based steelmakers continue to petition the International Trade Commission for anti-dumping measures to be taken against a number of nations for several types of steel and steel products. The industry continues to press its case with Congress, the president and the court of public opinion.

Steelmakers contend that many overseas nations sell their steel at below cost and are able to do so because their national governments subsidize the mills as a form of employment support.

Without question, the demand woes have caused ferrous scrap pricing to slip to levels not seen since late 1998. Processors are working on thin margins while carrying low levels of inventory and getting very little traffic across the scales.

“The scales are dead,” says one Texas processor, who also notes shredders in his region are operating far below capacity.

One possible hope for ferrous scrap dealers lies with the upward surge in natural gas prices, which is causing DRI costs to escalate.

Mexican steel mills have recently increased their scrap buying activities to pick up low-cost scrap to melt in place of DRI.

Even this silver lining could be blocked by a cloud, however. The continued strength of the U.S. dollar will make scrap from other nations more attractive than U.S. scrap for many mills looking to source affordable scrap.

An overall global demand increase for scrap due to a reduction in DRI production, however, could be one factor that will help lift ferrous scrap prices in early 2001.