scrap steel recycling
The value of obsolete ferrous scrap grades rose by from 26 percent to 29 percent in the U.S. between Feb. 21 and March 20.
Photo by Recycling Today staff

RMDAS figures show March surge in ferrous prices

Major grades gain between $120 and $180 per ton in value and reach levels not seen since the “super cycle” peak of mid-2008.

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March 21, 2022

Ferrous scrap prices soared in the March trading period, reaching heights not seen since the peak of the commodities “super cycle” of 2007 and the first half of 2008.

Figures compiled by the Raw Material Data Aggregation Service (RMDAS) of Management Science Associates Inc. (MSA) between Feb. 21 and March 20 reflect the impact of commodities sector turmoil caused by Russia’s invasion of Ukraine Feb. 24.

The national average of prompt ferrous scrap, as gauged by transactions known to Pittsburgh-based MSA, checked in at $703 per ton. That $181 per ton increase represents a 34.7 percent leap from the $522 average in the Jan. 21 to Feb. 20 trading period.

Prices for obsolete grades also rose significantly, though at slightly smaller percentages. Shredded scrap went from $475 to $599 per ton, marking a 26.1 percent increase for the grade. No. 1 heavy melting steel, similarly, rose 29.4 percent by moving from $421 per ton in the February buying period to $545 per ton in March.

The volatility in nonferrous and ferrous scrap markets is tied to Russia’s invasion of Ukraine and subsequent sanctions, which continue to create direct effects and side effects still rippling into new parts of the global pond in mid-March.

The scaling back of steel production in Ukraine occurred swiftly. On March 3, ArcelorMittal confirmed it had “taken the decision to idle its steelmaking operations in Kryvyi Rih, Ukraine.” Most other metals production in that nation also has been scaled back or come to a halt, according to media reports.

Soon thereafter, the curtailment of natural gas shipments to Western Europe led to mill cutbacks. AP has reported that Italy’s Acciaierie Venete shut three of its steel mills when energy prices “spiked to 10 times above normal.” The news service quotes an executive with the firm as saying, “Never, ever has this happened that we had to shut down ovens.”

The Russian attack on Ukraine and the growing consensus that China’s steel-intensive apartment tower construction boom has met an abrupt braking process likely has steel producers and scrap processors in the U.S. glad to be part of an industry with at least some measure of self-containment. 

On the domestic front, in the week ending March 5, 1.76 million net tons of steel were produced in the U.S., according to AISI, with a mill capability utilization rate (capacity rate) at exactly 80 percent. The tonnage figure is up 0.4 percent from the previous week ending Feb. 26, when production was 1.75 million net tons, and the capacity rate was 79.7 percent.

The following week (ending March 12), production at U.S. mills did decline by 1.4 percent compared with the prior week—not a figure to be expected when scrap prices are increasing from 25 to 35 percent.

Overall, U.S. steel output looks similar to what was happening in the steel industry in America one year ago. Production was 1.76 million net tons in the week ending March 5, 2021, while the mill capacity rate at that time was 77.7 percent. The current week's production represents a 0.1 percent increase from the same period one year ago.

However, the domestic market cannot be separated from the scramble by steel mills in Turkey, Europe and Asia to source U.S. scrap.

Year-end data from the U.S. Census Bureau show that some 17.9 million metric tons of ferrous scrap were exported in 2021. Thus, events overseas remain vitally important to processors in terms of trading patterns and pricing.