RMDAS Shows Ferrous Prices Drifting Down in February

RMDAS Shows Ferrous Prices Drifting Down in February

Buyers on the spot market paid $15 to $20 less for ferrous scrap in the February buying period.

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February 22, 2011

The ferrous scrap spot market in the first 20 days of February allowed buyers to pay a little bit less per ton for their scrap, but the price drop was only about a 4 percent. According to pricing survey data from the Raw Material Data Aggregation Service (RMDAS) that is compiled by Management Science Associates Inc. (MSA), Pittsburgh, national averages paid on the spot market for the most common scrap grades dropped from $17 to $21 in February. Click here to view February prices.

Although prices dropped across the board for prompt industrial grades, shredded scrap and No. 1 heavy melting steel (HMS), mills still paid more than $400 per ton for all grades across all regions.

No. 2 shredded scrap (shred with more than .17 copper content) maintained a national average price of $451 per ton on the spot market, continuing to fetch higher pricing than it did throughout the second half of 2010. The national average drop of $21 per ton marked just a 4.4 percent decrease from the $472 mills were paying the previous month.

Prices for the three grades covered in the RMDAS Index moved in fairly close sync across all three RMDAS regions (North Central/East; North Midwest; and South).

Pricing moved the least in the North Midwest region (consisting of Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, Wisconsin and the northwest corner of Indiana), where prompt grades lost only $14 in value and No. 2 shredded scrap just $17 in value.

Scrap recyclers speculate that many domestic electric arc furnace (EAF) mills had completed building up their winter inventories by the February buying period, making them less likely to make a spot purchase if the price was not to their liking.

Additionally, spot orders were unlikely to be placed from China or Taiwan in the first several days of February, as that nation’s factories and mills were largely shut down for the Lunar New Year holiday.

A scrap processor in the Upper Midwest says that as of late February, however, demand remains strong from mills and foundries in his region. “I’m having no problem selling steel scrap,” he comments.

Ongoing demand is being paired with obsolete scrap flows that have been slowed down because of weather obstacles in much of the United States in February. A scrap processor in Missouri says that, except for one three- or four-day thaw, most of February has provided difficult conditions for the peddlers who collect and haul scrap in rural counties.

The domestic steel industry appears to be serving customers who are more eager for their products with each passing month. The American Iron and Steel Institute (AISI) reported that in December 2010 steel mills in the United States shipped 7.1 million net tons of finished steel.

The figure marks an 8.6 percent increase from the 6.5 million net tons shipped the month before and a 17.8 percent increase from the 6.0 million tons shipped in December of 2009.

For the entire year 2010, the 83.4 million tons shipped by the domestic steel industry represented a 38.3 percent increase from the 2009 shipments of 60.3 million tons.

The Raw Material Data Aggregation Service (RMDAS) Ferrous Scrap Price Index is based on data gathered from a statistically significant compilation of verified ferrous scrap purchase transactions.

RMDAS is a service of Management Science Associates Inc. (MSA), Pittsburgh. Those seeking more information about RMDAS can contact MSA’s Jeralyn Brown at 724-265-6574 or via e-mail at JBrown@MSA.com.