In Like a Lamb

After gaining value during January and then dropping back in February of 2012, ferrous scrap prices “came in like a lamb” in March, with shredded scrap gaining just $1 per ton in value on the spot market.

According to the monthly averages issued by the Raw Material Data Aggregation Service (RMDAS) of Management Science Associates (MSA), Pittsburgh, national averages for the most commonly traded grades of ferrous scrap changed in value by $6 per ton or less in March.

The largest price fluctuation in any RMDAS region was in the North Midwest (consisting of Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, Wisconsin, the Dakotas and northwest Indiana), where prompt grades (consisting of No. 1 busheling, No. 1 bundles and No. 1 factory bundles) fell by $13 per ton on the spot market in March compared with the month before.

While prompt grades were losing $13 in value in the North Midwest, they declined by $7 per ton in the North Central/East region and gained $1 in value in the South.

The lack of price movement marked the first flat month since October 2011, when national averages for the three common ferrous grades also moved by just $6 per ton or less.

In the March buying period shredded scrap traded within $1 per ton on average in all three RMDAS regions, while No. 1 heavy melting steel fluctuated by no more than $6 compared with February.

A recycler in Texas characterizes supply as restrained in March and speculates that some generators and smaller dealers are holding on to material in the expectation that prices will rise in early April.

Unusually mild winter weather also has been part of the story. Most of the heavily populated regions of the U.S. and Canada have experienced few if any snowstorms or long stretches of freezing temperatures. Although the construction sector is far from booming, fewer seasonal interruptions have halted demolition work, construction projects or highway projects.

At the National Demolition Association Convention in March in San Antonio, economist Dr. Anirban Basu of Sage Policy Group (www.sagepolicy.com), Baltimore, noted that the construction sector continued to lag other parts of the U.S. economy, most of which have been performing well for up to 10 consecutive financial quarters.

The Federal Reserve Industrial Production index number has been on an upward march since the third quarter of 2009. “The recession is now over and has been for some time,” according to Basu.

On the demand side, a scrap processor in the South says March prices stayed stable in his region thanks to the export market. “Domestic steel mills really cut back their buying in March, but export buyers stepped in, and I ended up shipping most of my ferrous material out through the port of Charleston (S.C.),” he comments.

By the numbers, in the week ending March 17, 2012, raw steel production in the U.S. was 1.9 million tons, with a mill capability utilization rate of 77.4 percent. That is up from 1.83 million tons in the comparable week from mid-March 2011. However, steel production in the U.S. was down slightly (2.3 percent) from the previous week ending March 10, 2012, when production was at 1.96 million tons and the mill operating rate was 79.3 percent.

Year to date, steelmakers in the U.S. have produced 21.1 million tons, representing a 6.9 percent increase from the 19.75 tons produced through mid-March of 2011.

Globally, figures from the World Steel Association (www.worldsteel.org) indicate the world’s steelmakers produced 1.9 percent more steel in February 2012 compared with February 2011. Producers in global production leader China have produced 2.2 percent more steel in the first two months of 2012 compared with one year earlier.

Global steel production in February 2012, at 119.2 million metric tons, also increased compared with the month before. The January 2012 global steel output figure was 117 million metric tons.

Turkish steelmakers continue to produce at a healthy level, with that nation’s 2.76 million metric tons of production in February 2012, representing a 12.3 percent increase compared with its steelmaking output in February 2011.

March 2012 Spot Pricing

Ferrous scrap shippers received only minor per-ton price differences for their scrap in March compared with February. After two months of gaining value on the spot market, ferrous scrap prices fell about $30 per ton in the February buying period.

Reported regional aggregated spot market prices per gross ton shown for each commodity are based on all Management Science Associates (MSA), Pittsburgh, Raw Material Data Aggregation Service (RMDAS) participants’ actual order data submitted to and processed by MSA as of the 20th of each respective “buy month,” rounded to the whole integer. A map of RMDAS regions is available at http://rmdas.msa.com, as is a further explanation of RMDAS methodology and an accompanying disclaimer.

No. 2 shredded scrap is defined as containing 0.17 percent or greater copper content. The prompt industrial composite consists of an average of No. 1 bundles, No. 1 busheling and No. 1 factory bundles. Additional pricing information on each grade can be found at www.RecyclingToday.com.

© 2012 Management Science Associates Inc. All rights reserved RMDAS is a trademark of Management Science Associates Inc.

(Additional information on ferrous scrap, including breaking news and consuming industry reports, can be found at www.RecyclingToday.com.)