Steel Mills Need to Buy Ferrous Scrap Pushing Prices Higher by $5-$20

Written by John Packard

The scrap markets are still sorting themselves out as the domestic steel mills and dealers jostle for position with the dealers looking like they will be the victors in this go-around for January deliveries.

We are hearing early trades in Chicago as being done at up $20 per ton with one of our sources telling us heavy melt (HMS) is at $155 per gross ton, shredded scrap $190 per gross ton and busheling at $180 per gross ton.

One of our east coast scrap sources provided the following color on the trades that have been done so far: 

“Trading is ongoing at the up $10-$20 we were expecting in the south and Ohio Valley.  It’s largely driven by the restocking needs of mills.  The south is tighter than other areas, and mills there are quoting north of $200/GT for shred (some well north of that price), which is up $10-$20 depending on where people sold last month.  A few mill buyers in the Ohio and Midwest area were talking yesterday like they could pay sideways prices from December levels for January scrap, but I think the market is proving them wrong by this morning.  SDI and Nucor are already paying higher numbers.  In the east, where we got a $20 bump last month, we are looking at pricing $5-$10 higher than December.

No one I am talking to thinks the market tanks from here, or, on the other hand, thinks things are very good out there. It’s just that mills need to buy this month, it’s getting a little colder in the north, and prices are pretty low as they are.”

One of the Ohio Valley dealers told us that prices were firming due to the mills depleting stocks at the end of the year and needing to buy material now. He did not think prices will go higher from here and could actually retrench to December lows unless there is a strengthening to demand.

Watching the scrap markets over the next month of two will give steel buyers a signal as to exactly how strong the mill order books really are. There are mixed emotions on the subject by the dealers themselves.

We will have a more detailed profile of the ferrous scrap markets later in the week once the dust of negotiations has settled.

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