Steel, ferrous scrap slumps continue

Although employment numbers have been positive in the United States, steel output is drifting downward, and the ferrous scrap market is a victim of the demand slump.

The most recent steel output figures from the Washington-based American Iron and Steel Institute (AISI), for the first week of August, show raw steel production in the U.S. of 1.723 million tons. That is down 0.2 percent from the prior week but marks a more noticeable 7.8 percent decrease compared with the same week last year.

In the week ending Aug. 6, mills in the U.S. operated at a capability utilization (capacity) rate of 78.2 percent. That is down from 78.4 percent the prior week and a healthier 84.7 percent one year ago.

According to AISI, year-to-date output through Aug. 6 stood at 54.47 million tons. That is down 3.1 percent from the 56.22 million tons produced last year through Aug. 6.

Globally, the Brussels-based World Steel Association (Worldsteel) has aggregated first-half 2022 steel output figures from 64 different nations. Nine of the 10 largest steelmaking nations produced less steel in the first half of this year compared with last year, with India being the lone exception.

In the first half of this year, mills in the 64 nations combined to produced 5.5 percent less steel than in the first half of 2021. By volume, China’s 6.5 percent decline comprises a sizable portion of that. By national percentage, Iran’s decline of 10.8 percent and Russia’s of 7.2 percent exceed that of China.

Turkey, a major buyer of ferrous scrap exported from the U.S., made 4.6 percent less steel in this year’s first half compared with the first half of 2021. That circumstance, combined with reduced domestic demand, has helped drive down U.S. ferrous scrap prices in the late spring and into the summer.

Scrap price tracking service Davis Index says early August domestic ferrous scrap trading “concluded with a downward trend of $70 per ton” on prime grades throughout the U.S. The metals information service says mill buyers in Ohio and other regions “reduced their buying drastically” during early August.

Davis Index has shredded and heavy melting steel (HMS) grades moving down from $20 to $30 per ton in the early August buying period, again citing limited buying programs by mills in many regions.

Shredded scrap and even prime grades are now selling for below $400 per ton in parts of the U.S., which would bring their pricing down to a level not seen since the depths of the COVID-19-related slowdown.

Reductions in August follow previous drops in July, when the Raw Material Data Aggregation Service (RMDAS) price tracking performed by Pittsburgh-based MSA showed prompt grades losing a whopping $150 per ton in value. The obsolete shredded and HMS grades, meanwhile, fell by about $35 to $40 on average nationally.