SA Recycling CEO labels ferrous market ‘subdued’

The CEO of one of the largest metals recycling companies in the United States has characterized the market for North American recycled steel as consisting of “subdued activity” this summer and early fall.

However, he also cites factors that could cause upward price pressure in the upcoming winter months.

In his report for the Ferrous Division of the Brussels-based Bureau of International Recycling (BIR), George Adams of California-based SA Recycling writes in part, “While July and August trades were drawn out and contentious, the battle in the end was generally for sideways prices. Dealers were heard to say, ‘I’ve never fought so hard for nothing in my life.’ The result was determined by a combination of weak new steel orders giving the mills ammunition and less recycled steel in the market supporting dealer prices.”

After noting September negotiations brought more of the same, Adams cites flat conditions for hot-rolled coil (HRC) steel as contributing to the ceiling on recycled steel prices. HRC pricing, he says, reflects negatively on the price of recycled steel, as there is little to support increases in the U.S. domestic market.

"The export market has presented a similar scenario: shipments on both U.S. coasts have seen prices weaken over the summer, although limited recycled steel availability has been somewhat supportive," Adams says.

Pointing to activity in China that is not a high-volume buyer of U.S. ferrous scrap, he says, “Weakness in China has been the underlying problem for export prices internationally, as cheap Chinese billet flooded the markets at ever cheaper prices this summer. This included the Turkish market, thus lowering U.S. bulk sale prices.

“U.S. dealers had little ammunition to fight for higher recycled steel prices this summer.”

One potential bright spot, Adams says, comes in the form of recent Chinese stimulus announcements that have changed that dynamic as the country’s billet already has seen a substantial price increase on the international market, thus helping to make U.S. recycled steel more attractive to international buyers. This is supportive in the near term.

Another factor that could contribute to higher U.S. ferrous prices is a decline in collections at a time when demand for recycled steel is increasing, Adams says.

“There have been several electric arc furnace (EAF) start-ups already this year, with more to come in 2025," he says. "These mills consume 100 percent-recycled steel and its alternatives. ... EAF demand for recycled steel will increase.“

Trade restrictions in the form of recycled steel export duties and bans also could play a role if prices rise globally or in the U.S.

“More and more countries will try to keep recycled steel from leaving their shores so that they can use it for their own needs," Adams says. "That will put even less recycled steel into the international market, further supporting prices.”

Looking ahead to an October mill buying period in the U.S. (now underway), Adams sees little on the demand side to support much more than sideways pricing for another month.

“October is the last real month this year for substantive collections of recycled steel as both November and December are punctuated by holidays, including Christmas and New Year, which fall on Wednesdays," he says. "That effectively cancels out two whole weeks of collections in December. If collections are weak for the rest of this year, it only gets worse in January and February as winter weather sets in. That could create a limited supply of recycled steel at a time when, traditionally, there is [mill] restocking in the New Year.

“Mills are aware of these conditions and may have to buy early or face recycled steel shortages thereafter. That is what dealers see as their support in the near term for some upside in pricing. While the increases may be modest, there is potential for higher recycled steel prices before year end.”

The Ferrous Division of the BIR will next convene in late October, when the BIR holds its World Recycling Convention Round-Table Sessions in Singapore.