Holding steady

Ferrous scrap in late June and early July traded within a narrow range compared with the month before, continuing a trend that has endured for most of 2014.

July transaction figures collected by American Metal Market (AMM) showed the No. 1 busheling grade edging back above $400 per ton in the Midwest region, reaching that figure for the first time since February. However, during the March-to-June phase when it was below $400 per ton, the grade never fell below $391.

Overseas buyers showed greater interest in the market in July, according to AMM, but only enough to boost average export prices by a few dollars per metric ton.

Shredded scrap, whether measured by AMM’s methodology or by the Raw Materials Data Aggregation Service (RMDAS) run by MSA Inc., Pittsburgh, so far this summer has been trading for some $20 per ton less on the domestic market compared with busheling and other grades.

On the supply side, scrap processors continue to cite stiff competition to feed shredders and other processing equipment. A recycler in south Texas says “new yards are still popping up” in the region and cites concerns that newer yards in rural areas may not be following the same antitheft regimens that are enforced within city limits.

Shredder operators throughout the country continue to run on pared-back schedules. Initial research taking place for Recycling Today’s Auto Shredder List and Map (to be published in the October 2014 edition) also has turned up several shredders that have been idled during the previous two years.

Economic activity in the U.S. is pointing to slow-to-steady growth in the sectors likeliest to generate prompt and obsolete scrap. The construction and demolition sector is continuing its slow climb back from the lean years of 2008 and 2009. (See the feature “Brick by brick,” starting on page 92 of this issue.)

Automotive and light truck sales are brisk enough to keep assembly plants and automotive component suppliers humming. June figures collected and reported by Autodata Corp., Woodcliff Lake, New Jersey, show June vehicle sales increasing by 1.2 percent compared with May. Americans are on pace to buy nearly 17 million passenger cars and light trucks in 2014, and in June 2014 bought vehicles at a pace not experienced since July 2006.
 

Despite plenty of bad news concerning recalls and safety issues, Detroit-based General Motors Co. (GM) sold more vehicles in June than in the month before, contrary to the expectations of analysts who had figured the bad news would hurt the company.

Healthy sales figures for GM, Ford Motor Co., Dearborn, Michigan, and Chrysler, Auburn Hills, Michigan, is welcome news for scrap recyclers who serve the assembly and components plants for the three auto companies.

More new cars on the road should help feed into the auto dismantling and auto shredding chain. Although the 1.4 million new cars sold in the U.S. in both May and June will not equate to 2.8 million vehicles quickly arriving at shredder yards, the aggregate number of more cars on the road will ultimately help shredder operators.

On the ferrous scrap demand side, raw steel output in the U.S. was 1.9 million tons in the week ending July 12, 2014, up 2.7 percent compared with output the week before, according to the American Iron and Steel Institute (AISI), Washington.

The AISI calculated the steel mill capacity rate at 79.1 percent for the second week of July 2014, an improvement compared with the 77 percent rate in the second week of July 2013.

Some 50.73 million tons of steel had been produced through mid-July 2014, compared with 50.68 through mid-July 2013, pointing to essentially flat output.

Geographically, based on July 2014’s weekly figures, the Great Lakes is the leading steel producing region, only slightly ahead of the southern region. For the week ending July 12, 2014, the AISI’s regional steel output broke out this way: Great Lakes, 677,000 tons; South, 660,000 tons; Midwest, 238,000 tons; Northeast, 238,000 tons; and West, 90,000 tons.

Steelmakers around the world continue to set new monthly figures for production. According to the World Steel Association (Worldsteel), Brussels, “World crude steel production for the 65 countries reporting to the [Worldsteel] was 141 million metric tons in May 2014, an increase of 2.2 percent compared to May 2013.”

Among the nations most likely to buy ferrous scrap from the U.S., Turkey steelmakers produced 2.2 percent less steel in the first five months of 2014 compared with the same period in 2013.

China remains the world’s leading steelmaker, with its steel industry heavily geared toward basic oxygen furnace (BOF) production having made 342 million metric tons of the world’s 684 million metric tons of steel produced in the first five months of 2014, or exactly half.

The American Metal Market (AMM) Midwest Ferrous Scrap Index is calculated based on transaction data received that are then tonnage-weighted and normalized to produce a final index value. The AMM Scrap Index includes material that will be delivered within 30 days to the mill. Spot business included after the 10th of the month will not be included. The detailed methodology is available at www.amm.com/pricing/methodology.html. The AMM Ferrous Scrap Export Indices are calculated based on transaction data received that are then tonnage-weighted and normalized to produce a final index value. The detailed methodology is available at www.amm.com/pricing/methodology.html.