Downward price trends evident in ferrous market

Domestic steel mill scrap purchase transactions recorded by MSA Inc.’s Raw Material Data Aggregation Service (RMDAS) show the high-volume grades lost value in nearly every region of the United States in late January and the first few weeks of February. The sole exception was shredded scrap remaining flat in the RMDAS North Central/East region.

Unfortunately for shippers that prefer higher scrap prices, mid-February reports indicate export demand levels seem unlikely to boost those prices the remainder of this month. In the domestic steel industry, output is stable but is down year on year.

Mill transaction figures recorded by RMDAS from Jan. 20 to Feb. 19 show prompt grades falling by $19 per ton as a national average, while No. 1 heavy melting steel (HMS) lost $11 in value and shredded scrap’s value fell by $5 per ton.

In the RMDAS South region, the prompt industrial composite grade lost more value, $27 per ton, than in the North Midwest and North Central/East regions, where the grade lost $7 and $16 per ton respectively.

While shredded scrap held its value in the North Central/East region, it lost $2 per ton in the North Midwest and dropped by $12 per ton in the South.

No. 1 HMS, a frequently exported grade, suffered its biggest drop in the domestic mill-dependent North Midwest RMDAS region, losing $17 per ton in value in late January and the first two and a half weeks of February.

In the North Central/East and South regions, with greater availability to export docks, No. 1 HMS dropped by $10 per ton in the South and just $9 per ton in the North Central/East.

Stable domestic mill demand offers one relatively positive piece of news, according to production statistics compiled by the Washington-based American Iron and Steel Institute (AISI).

According to AISI, in the week ending Feb. 17, domestic raw steel production rose by 0.6 percent compared with the previous week. However, output so far in 2024 lags behind production levels in early 2023.

In the week ending Feb. 17, 2023, some 1.8 million tons of steel were made in the U.S., while in the same week this year that figure of 1.72 million tons was down by 4.4 percent.

Through Feb. 17, output of more than 11.65 million tons is down 1.8 percent from the more than 11.87 million tons made in the first seven weeks of 2023. According to AISI, mills so far this year are operating at a  76.5 percent capability utilization or capacity rate compared with 78.1 percent rate in the same period last year.

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Davis Index, meanwhile, is reporting in the third full week of February that overseas buyers shopping at East Coast ports have been able to purchase scrap for up to $5 per ton less compared with the week before.

According to Davis Index, the dockside price for No. 1 HMS recently has fallen by $5 per ton in Boston and Philadelphia while the grade has lost $4 per ton in value in New York. On the Gulf Coast, buyers have only managed a $1 per ton discount in the third week of February.