Extreme weather hits US scrap market

SMU spoke with a trader in Pennsylvania who said there are major problems with truck shipments. The cold weather had limited regular deliveries last week at various mills and foundries. Commercial truck movement was prohibited on Pennsylvania highways Sunday and Monday and this will definitely affect scrap deliveries. He said scrap prices will increase by $10-20 per gross ton (gt), as a result.

Another broker in the Central region believes scrap prices will be up much more. He also expressed concern about truck movements, citing the lack of operations with most carriers.

Reduced inflows of scrap into dealers’ yards will result in less tons available for February. He went on to say one of his consumers believes the scrap market could be up $50/gt in February. He also pointed out only 20% of the scrap he bought for January delivery has been shipped.

We also spoke with a dealer in the Southeast who told us Georgia and Alabama did not get hit with ice and snow as much as other southern areas. As a result, he sees the February market sideways to up modestly. However, he concedes other regions may come out stronger.

A Midwestern scrap executive told SMU, the regions in the Midwest are experiencing very cold weather. They have received snow but not to the extent of places to the east. The roads are clear and trucks are moving, but at slower rates than usual.

He feels the market for February could rise by $20-30/gt. He added that some of the processors with whom he has spoken believe prices could be higher, as they point to areas in the south that were more severely impacted by the bad weather. However, he cautioned there could be mills whose production may also be limited by the ice and snow, which could blunt demand for scrap they would otherwise need.