Detroit Ferrous Scrap Said to be Up $40/$60

We are still early in the negotiation process for ferrous scrap pricing for the month of February. The expectation is for much higher than originally thought (sideways to +$30) a couple of weeks ago. SMU scrap sources are advising the Detroit market settled today at up $40 per gross ton on obsolete and shred grades while prime grades (busheling/bundles) were up $60 per gross ton.

One of the large national scrap companies advised us today, “A very strong bullish tone in the scrap markets today.  Real concerns on scrap availability persist, particularly on the prime grades.  Recovery in the mill operating rates in conjunction with lean raw materials inventories, have the suppliers anticipating $30+/gt on obsolete and $40+/gt on busheling and bundles.  Export tonnages being re-directed into the domestic markets have the potential to temper pricing over the next 60-90 days but the near term demand for scrap will keep prices firm.  I would anticipate the market beginning to develop in the coming days.”

The +$40 on prime grades may be a stretch but different markets will react differently to the needs of the mills. The sheet mills like Nucor, SDI, North Star BlueScope, NLMK Portage and the new Big River Steel are thirsty for scrap with good order books.

SMU warns steel buyers that as the scrap settlement prices come across anything at, or above, $40 per gross ton, the expectation for sheet buyers is for another round of increases early during the month of March.

The last increase announcements targeted hot rolled at a minimum of $640 per ton, coldl rolled and coated at $850 per ton base prices plus extras.