Scrap Prices North America

Ferrous Scrap Prices Up $20 in March

March 7, 2019

Ferrous scrap prices for March settled up $20/GT, report Steel Market Update sources.

“The ferrous market was up $20 across the board without much deviation across the country. That puts Midwest shred at around $355-360 and busheling at $370-380. Export has rebounded this week by about $5-10 from recent sales. The most recent sale to Turkey was around $319/MT CIF. Flows are still slow thanks to the poor weather across most of the country. At this point, I don’t expect much change for April,” said one dealer in the Northeast.

Prices in the Ohio Valley rose $20/GT for all grades with the exception of turnings, which traded sideways, said another dealer. He reported shred at $360 per ton, bush at $385, HMS at $340, plate at $355-360 and turnings at $190. Strong domestic demand combined with weak inbound flows were the major factors increasing prices, he said. “Markets look stable for the foreseeable future. Export prices are showing signs of strength, which will keep coastal scrap out of the domestic market. U.S. mills look to maintain 80+ percent capacity utilization and will seek to build prime inventories before auto stamping plant shutdowns,” he added.

Initial buys of scrap for March were up $20/GT across the board in Detroit, with other districts expected to follow, concurred another source. He put busheling in Chicago at $375/GT, shredded at $345/GT and HMS at $315/MT, assuming the mills there follow suit. Demand for scrap, both domestically and internationally, is quite firm, he added. “We have heard some buyers have agreed to up $25/GT on some cut grades and shredded due to poor logistics brought on by winter weather in certain regions. The Turkish mills are coming into the market again and in doing so have almost given back the pricing of mid-January and have set up a firm market in the U.S. for April. We’ll have to see if the rise in scrap prices of $20 will cover the mills’ needs.”

CRU North America Steel Analyst Ryan McKinley attributes the March increase primarily to the severe winter conditions in the U.S. “Cold and snowy weather in much of the North and Midwest caused scrap flows to dry up in February. While the export market is indeed up, I think the weather, along with flooding on the Mississippi River system, is really what drove the market higher this month. The latter probably affected delivery to more than 10 mills that count on scrap deliveries by barge,” he noted.

What happens to scrap prices in April will depend on how rapidly the weather improves, McKinley said. “If we are in for harsh winter weather conditions into late March or early April, we may well see mills boost prices again to keep material flowing. If the weather warms up quickly in March, then more scrap will become available. There can be a bit of a ‘surge’ in supply during the springtime and this may force prices lower.”

He added: “What happens in the export market will be important, but domestic supply/demand factors will be the primary determinate. I think the largest exposure for the U.S. domestic scrap market to the influence of export prices will come this summer.”

Pig iron prices are also poised to rise, commented another scrap exec. “It is safe to say the next round of pig iron buys will be up from the $360/MT CFR levels last purchased. The combination of higher iron ore costs and increased scrap activity are the main culprits.”