RMDAS confirms recycled steel price gains; January could see another increase

Steel mills paid between $14-23 per ton for benchmark grades of recycled steel in late November and the first three weeks in December, according to transaction pricing gathered by the Raw Material Data Aggregation Service (RMDAS) of Pittsburgh-based MSA Inc.

Consistent demand for ferrous scrap at United States electric arc furnace (EAF) mills and from overseas buyers has been one factor in the recent price surge.

Now, as with the previous winter, ice- and snow-covered roads in major U.S. cities are poised to pinch ferrous scrap supplies. The disruptive weather arrives at the same time scrap generators, such as manufacturing plants, construction and demolition sites and independent collectors, are working at a slower holiday season pace.

In the RMDAS Nov. 21 to Dec. 20 tracking period, mills throughout the U.S. paid $14 per ton more for prompt scrap (No. 1 busheling, No. 1 bundles and No. 1 factory bundles), $20 per ton more for No. 1 heavy melting steel (HMS) and $24 per ton more for No. 2 shredded scrap.

Between Christmas Day and New Year’s Day—already a slow scrap generation period—a winter storm bringing up to 9 inches of snow hit parts of Connecticut, New Jersey and New York, including New York City.

According to Atilla Widnell of commodities tracking service Navigate Commodities, that storm was joined by another in Northern Europe that brought similar interruptions to scrap collection and shipping in a region where scrap is exported to several countries.

In a Dec. 28 LinkedIn post, Widnell says his source in the metals recycling sector are indicating mills may be asked to pay another $20 per ton when they negotiate for purchases in early January.

In the post, Widnell says reasons to expect higher recycled steel prices in January include domestic U.S. steel demand, winter weather in the U.S. and Europe and one additional factor—that Turkish EAF mills are “running hot,” according to satellite heat mapping.

In Turkey, 31 EAFs pushed capacity utilization rates to as high as 96 percent last week, rebounding from an October-to-November sideways move, according to Widnell, adding that the mills are “almost certainly squeezing every dime out of improved rebar margins.”

The confluence of factors could result in U.S. monthly domestic mill-and-yard settlements for January rising by $20-40 per ton, Widnell speculates, noting that increase might not fully include the effects of winter weather.

On the export side, U.S. bulk ferrous scrap exporters may try to squeeze for more as Turkish mills rush to book cargoes, according to Widnell.

He says metals recyclers might wish to stage flows for the first and second weeks of January, lock in trucking now and sell into real-time heats and melts, not lagging American Iron and Steel Institute data and subsequent news coverage.