Scrap Iron Prices Drift Down in April

The spot market for ferrous scrap remained a buyer’s market in April, as steel mills were able to pay as much as $43 per ton less for iron and steel scrap in the April buying period.

Transaction pricing compiled by Management Science Associates Inc. (MSA) for its Raw Material Data Aggregation Service (RMDAS) showed national spot market buyers paying $167 per ton on average for prompt industrial grades of ferrous scrap—the lowest number seen since November of 2008.

Nationally, buyers actually paid more for No. 2 shredded scrap on average than they did for prompt grades. No 2 shredded scrap sold for $175 per ton nationally and sold for roughly the same price across all three RMDAS geographic regions.

All three of the grades for which MDA discloses monthly averages—No. 2 shredded scrap, the prompt industrial composite and No. 1 heavy melting steel (HMS)—lost value in the April spot market compared to March.

Regionally, scrap sellers in the North Central/East region noticed the sharpest decline, with industrial grades falling $43 per ton and No. 2 shredded scrap dropping by $26 per ton.

Scrap recyclers continued to report very little buying taking place in April, although some have reported that export demand seems to have been growing in early Spring.

In addition to bulk shipments to Turkey, export brokers seeking containerized ferrous scrap have been active in some parts of the country, with shopping lists that include a wide range of ferrous grades.

In the United States, steel is being produced at roughly half of the pace it enjoyed in 2008. Slightly more than 1 million tons of steel were produced at mills in the United States in the week ending April 11, 2009, compared to more than 2.1 million tons in the week ending April 11, 2008.

The 43.3 percent capability utilization rate for the week ending April 11, 2009, is at least higher than that of the week before, when just 965,000 tons of steel were made for a 40.4 percent utilization rate.

But the year-to-date figures for American steelmaking remain gloomy, with 14.7 million tons having been produced in the same three-and-half-month timeframe when 31.1 million tons were produced last year.

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 Ralph Pinkert at 773-588-1199 or via e-mail at RPinkert@MSA.com.