Miller on scrap: Ferrous raw materials markets trending down for March

The March outlook for most ferrous products is trending down faster than most participants thought as recently as a week ago. Mill-owned domestic scrap brokers have been warning the dealer trade they will seek to take the prime grades down at least as much as $50 per gross ton (gt), with shredded and other obsolescent grades down $30/gt.

This would put busheling at $425-35/gt delivered to Great Lakes-area mills. If shredded scrap falls $30, that price should stabilize at $425-35/gt. It seems shredded has room to fall more than $30 since it went generally sideways in February. Reports are the flows of shredded feed improved last month.

One of SMU’s sources said, “Prices could sink lower than $50/gt in some districts.”

With several mills taking partial outages during March, and with other mills saying they’ll buy less scrap than usual, it sets up a substantially weaker market for next month.

The export market to Turkey has also weakened. On Tuesday, a US exporter sold a March mixed cargo of shredded and plate and structural at an average price of $415 per metric ton (mt) CFR. The equivalent price for HMS 80/20 would be $395/mt. This is down $19/mt from the last sale from the US at $414/mt done about 10 days ago. It seems the exporters are seeing the writing on the wall.

Another ferrous product that has come under pressure is basic pig iron. A month ago, there were several buys at $450/mt FOB S. Brazil. This week three cargoes changed hands at down numbers. US mills bought one cargo at $435/mt followed by two more at $430. The freight to the US is estimated at $30/mt.

SMU contacted a US-based pig iron buyer to get his views on these transactions. He said, “I think pig iron will be at $420/mt FOB or about $450 CFR New Orleans soon.”

The spring months, as we have said previously, are weak months for scrap. The warmer weather allows obsolescent scrap to flow easier into processors’ facilities. This increases the supply and prices decline. So, we can expect April tags to continue to drop.

Stephen Miller

Stephen Miller started his career in the scrap metal industry in 1978 at Luria Brothers in Cleveland. Over the last 40-plus years, he has worked in all capacities in the trading business. He has had positions in both domestic and international scrap trading. In addition to scrap, Miller was at the forefront of the pig iron trade and established a pig iron distribution company under the name of Ferrosource, Inc. Most recently, Miller has concentrated on the scrap export market and regularly does consulting for several companies in the industry.