January Scrap Prices Come into Focus
Jan / 10 / 2010 -
January Scrap Prices Come into Focus
SMU scrap dealer sources put prime scrap at $385-$395 per long ton delivered, Midwest Mills
Scrap Prices Firming – January Up $40-$50
SMU revisited with the dealers we spoke to earlier this week to see if their “To Be Determined – TBD” deals had been finalized. The responses came back that prices have firmed and will be up $40-$50 per long ton compared to December.
Ohio Valley and Chicago area dealers advised SMU prices were falling in line as follows:
Prime Grades (including #1 Busheling) are being sold at $385-$395 per long ton delivered. This is slightly lower than the $390-$400 per long ton being bantered about earlier this week. One of our Midwest sources indicated $390 as being at the high end of their range. The AMM Chicago Consumer buying price last month was $345 for #1 Busheling (what Nucor uses to base their Raw Material Surcharge to their contract customers).
Shredded Scrap is being sold for $340-$350 per long ton delivered in both the Ohio Valley and Chicago area.
Plate & Structural is being reported at $350 (or essentially at the high end of shred).
Heavy Melt (HMS) is being sold for $300-$310.
Dealers in the East are reporting their pricing as being approximately $10 per long ton lower than those delivered to the Midwest. East coast dealers are reporting little to no activity in the export market (which is mostly with Turkey). Their understanding is the rebar market in Turkey is quite weak and there is not enough (or no) margin between scrap and rebar pricing. However, while speaking with an analyst out of New York City earlier today a comment was made the Mideast and North Africa steel markets are booming and it may only be a matter of time before the Turks come back into the scrap market.
The American Metal Market came out with new #1 Busheling scrap numbers for Chicago (Consumer prices) at $390 per long ton (dead middle of our $385-$396 range). For Nucor contract customers this means their Raw Material Surcharge (RMS) will increase by an additional $45 per ton. Nucor uses the Chicago Consumer #1 Busheling as their benchmark product with $170 per long ton as their basis off which their RMS is determined. The new RMS will be $390 less $170 = $220 per ton or $11.00/cwt.
It is anticipated the domestic steel mills will adjust flat rolled prices higher within the next week to two weeks using the higher scrap costs as their reasoning. The domestic mills most affected by the higher scrap costs are the EAF (electric arc furnace) mills such as Nucor, Steel Dynamics, Gallatin, Bluescope, Beta and Severstal Columbus.
Stay tuned to Steel Market Update for more information regarding steel and scrap prices as they happen. The best way to do so is to register for a free 4-week trial online (www.steelmarketupdate.com) or to become an annual member.
