August Scrap Numbers Moving Sideways, Pig Iron Firming

Written by John Packard

Ferrous scrap prices in the Midwest, Mid-Atlantic and East Coast have been moving sideways as the August negotiations come to a close. We are hearing from our scrap sources that the balance between supply and demand is quite good as flows have been solid and mill orders books are “decent.”

Our scrap sources in Chicago are calling prices as sideways even with the #7 blast furnace coming back online at Indiana Harbor (ArcelorMittal). The East Ccoast is also reporting prices as sideways and most of the Midwest cities are reporting sideways pricing. We heard from Mike Marley of that there were some higher prices being reported in the South. All in all the sideways pricing should be good news for the steel mills who are enjoying a nice spread between scrap pricing and hot band pricing.

From one of our East Coast scrap sources we were told: “Prices along the East Coast, in the South, and OH Valley all trended sideways in August.  This was not a surprise.  In the east, HMS was $335-$340/GT, shredded was $365, and 5’ P&S was $360/GT.  In the OH Valley, prices were $20-$25/GT higher respectively.

“Demand is very solid, and supply, while it has been decent, will not continue to be as strong as we get further into summer.  Flows will taper off and get tighter as we move into late-August and September.  Dealers know well that they will not be able to replace the scrap they are selling today at cheaper prices going into the second half of the year.  If demand at the mills stays decent, which it seems like it is doing, I don’t see much downside in prices, though I don’t see much of a pop either until much later in the year. “   

While one of the larger scrap supply chains told us: “Pricing did settle out essentially at sideways.  Mill demand remains solid and scrap flows are steady.  Overall, the market appears to be relatively balanced on the domestic front.  We’ll continue to monitor the export markets closely over the coming weeks to determine if what, if any, impact they may have heading into September.  Pricing levels in the Midwest and Southeastern markets were essentially as follows:  #1 HMS $360-365, Shred $375-385, Busheling $395-405, all gross ton delivered the consumer.  The information I’m hearing on pig iron is consistent with your numbers [$415/metric ton], and that market appears to be firming.“

From another source we heard Midwest/Chicago area prices as being #1 HMS $360-$365, shred at $375-$380 and #1busheling as being $395-$405.

On the pig iron front one of our sources reported to SMU that due to the fighting in the Ukraine resulting in damaged infrastructure. “…they have had to change their port of shipment and they have had to reroute the rail cars to avoid destroyed bridges. Donetsk production, prices will rise….”

Russia and Ukraine are the largest exporters of pig iron to the United States having shipped 2.5 million tons in 2013. Brazil is the other country exporting pig iron to the U.S. but now at a reduced rate compared to previous years. Brazil shipped approximately 2 million tons last year but in prior years it was over 3 million tons according to one of our pig iron sources.

Pig iron prices are reported to be at $415 per metric ton, NOLA (New Orleans) which is up from $403 per metric ton.

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