Scrap Iron Prices Stabilize

A rare glimmer of stability arrived in the January buying period for ferrous scrap, with mills in the United States on average paying within a few dollars per ton of what they paid in December.

National averages for mill spot prices for prompt industrial scrap, shredded scrap and No. 1 HMS all moved narrowly in the $9 to $12 per ton range, according to transaction pricing compiled by Management Science Associates Inc. (MSA) for its Raw Material Data Aggregation Service (RMDAS).

The stable pricing scenario meant mills paid on average $260 per ton for prompt industrial grades, $250 for shredded scrap and $201 for No. 1 Heavy Melting Steel (HMS).

Shredded scrap took the closest thing to a jump, with spot buyers paying on average $12 more per ton for what RMDAS defines as No. 2 Shredded Scrap (.17 or above copper content).

Regionally, the North Central/East region (which stretches north to south from New England to northeastern North Carolina and west to Ohio, Michigan, Kentucky and much of Indiana) witnessed the most price movement, with buyers paying from $11 to $15 per ton more, depending on the grade.

A scrap recycler in the Northeast reported heavy January buying in the export market, particularly from Turkey, which may have helped boost pricing in that region.

The South region (which includes the Gulf Coast states, Texas, Oklahoma, Arkansas, Georgia, Tennessee, most of the Carolinas and western Virginia) saw less price movement. It also includes the only regional case of a grade losing value, with mills in the Southeast paying $6 less per ton on average for No. 1 HMS.

Domestic steelmakers were especially quiet during the holiday season, with the American Iron & Steel Institute (AISI) calculating a mill capacity utilization rate of just 33.5 percent for the week that ended Dec. 27.

That figure marks a low in recent memory, and represents weekly total steelmaking production of around 800,000 tons—down some 60 percent compared to the same week at the end of 2007.

The new year showed only a slight rebound, with AISI figures for the week ending Jan. 3, 2009 showing utilization rates at 36.3 percent and production at 866,000 tons.

Those weekly figures extrapolated over an entire year paint a gloomy picture of annual national production at below 50 million tons (compared to more than 100 million tons in recent years). Forecasters do not typically use the holiday season production figures as being typical for an entire year, however.

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.