Winter supply hiccups spur ferrous price boost

Winter weather impacting travel in several regions of the United States in January continued into the first two weeks of February, and the subsequent tightening of ferrous scrap generation and transportation likely was a major factor contributing to a rise in recycled steel prices.

An increase in ferrous scrap pricing almost certainly felt long overdue. While winter weather can be unhelpful in terms of scrap inflows, an increase in the value of inventories and receipts from mills, foundries and brokers was likely welcomed by processors and sellers.

After shredded scrap ended the year selling at less than $375 per ton on average, as of the second week of February, Davis Index had U.S. mills paying an average of $406.

At that time, a recycler whose company does business in several U.S. regions predicted the price for shredded and other benchmark grades was likely to rise during the rest of the month.

“The polar vortex, for most of January, was the pivotal event escalating the upturn of scrap prices,” the contact tells Recycling Today. “Cold weather and storms reduced scrap intakes by over 40 percent in some regions in January.

“This was after mills overdid inventory reductions in November and December of last year. The net effect was too little scrap at a time when there was some modest restocking started in January, and scrap prices increased by about $20 per ton.”

As the second week of February progressed, more disruptive weather moved in, with weather services predicting a series of three ice and snowstorms for parts of the Midwest and Eastern U.S. in the next several days.

“After all settles, the market will be up by more than $40 for shred and busheling and more than $30 for cut grades in February,” the recycler says. “Scrap flows are still lethargic, and weather is still a factor nationally affecting scrap availability.”

Also in February, American steel mills enacted price increases for hot-rolled coil (HRC) steel, rebar and other mill products. Metals industry analysts have cited rising scrap costs as well as a 25 percent tariff on inbound steel announced by President Donald Trump as likely factors.

The Steel Manufacturers Association (SMA), which represents recycled-content electric arc furnace steelmakers, has endorsed the tariff regimen as positive for its own sector and American industry overall.

However, the recycler contacted by Recycling Today is not as uniformly supportive, saying, “There is more optimism and concern about the tariffs. While tariffs could help some, it hurts others, including the all-important consumer.”

Before the White House announced its across-the-board tariff on all inbound steel, it announced and then delayed a tariff on all inbound materials and products arriving from Canada and Mexico.

Such start-and-stop actions emanating from the White House do not sit well with business planners, according to the recycler.

“It’s less about the tariffs and more the uncertainty that creates the concern,” he says. “How do you plan for the unknown? Unfortunately, chaos is the agenda for the next four years.”

While weather and political chaos seemed to have contributed to a boost in ferrous scrap prices domestically, as of mid-February, overseas buyers without a front row seat to the weather or political drama had been slow to react to rising prices.

Only later in the second week of February were reports from Davis Index starting to indicate that buyers representing mills in Turkey and the Indian subcontinent were making higher offers for U.S. scrap.

Atilla Widnell of Singapore-based satellite tracking and analysis firm Navigate Commodities says traders should refer back to the first Trump administration and set of tariffs regarding pricing circumstances for the rest of 2025.

In a February LinkedIn post, Widnell writes, “Domestic U.S. flat-rolled HRC benchmarks surged 40.9 percent (or $270 per short ton, to $930 per ton) in the seven months after the implementation of President Trump’s first round of tariffs [in] 2018.”

Calling those increases “a harbinger of things to come in 2025,” Widnell says American HRC buyers, along with galvanized steel and tubes and pipes, are among those who likely will “feel the most pain” as post-tariff pricing sets in.

In the first five weeks of 2025, mills in the U.S. operated at 74.2 percent capacity, according to the Washington-based American Iron and Steel Institute (AISI).

Although U.S. mills produced about 0.3 percent more steel, or 23,000 tons, in the first five weeks of 2025 compared with early 2024, the mill utilization rate was down from 75.4 percent in early 2024 because of added capacity.

Looking back to 2018 for his example, Widnell says the new tariffs—if they stay in place as announced without exemptions—could cause the U.S. mill capacity rate to rise from 10 to 15 percent as the year plays out.

On the finished steel pricing front, Widnell says it would not be surprising to see the sale price of HRC increase by up to 40 percent in the U.S. this year, as it did in 2018.

For recyclers, that could mean a buoyant scrap price, and for overseas buyers, it could mean they will have to compete more aggressively with U.S. mills to keep the transoceanic spigot open.