Detroit, Chicago enter Jan scrap mart with lower offers

The Chicago area followed suit:

• #1 busheling: down $50/gt
• Shredded: down $20/gt
• P&S: down $20/gt
• #1 HMS: down $20/gt

Mills in the Great Lakes region sensed there was ample supply of most grades. Also, they all bought heavily last month and so had sufficient inventories to make this move, market participants said.

Still, the move surprised most dealers.  In the southern areas, the drop in busheling prices could be less because they did not go up as much as Detroit and Chicago last month, sources said.

Some historical context

Scrap prices don’t often fall in January because lower industrial activity in December typically slows generation of prime scrap. And winter weather in the North can slow collection of obsolete grades.

That said, scrap prices started out the year lower in 2022, which was not initially a good year for steel. The downward trend then reversed abruptly following Russia’s invasion of Ukraine in February and an ensuing panic about pig iron supplies.

Scrap prices also started January lower in 2019, a year characterized by mostly lower hot-rolled coil prices, according to SMU’s steel and scrap pricing archives.