Letter to the editor: April scrap settle?

I believe this is actually a good idea, but my question would then be, “Why not raise prime $20/gt?”  OK, so we all know the answer to that question. However, I have not seen a fall-off in steel industry capacity utilization, and despite rumors of monstrous inventories of Canadian busheling overhanging the market, prime does not seem to be the target here.

I certainly do not own a shredder, but I am hearing the economics of shredding are not looking good these days. 

I do sell shredder feed, and I can tell you that shredders have been overpaying the market for years based on their sales prices. The supply and the quality of shredder feed has been under stress for a significant period of time. Dealers are picking hulks as clean as a whistle and Zorba prices are not setting records.

As more of our steel capacity goes to the electric furnace vs. the integrated mill, the demand on shred is only going to get greater, and the overall health of the shredding industry is marginal at this time, in my opinion.

I have never held the title of “Melt Shop Superintendent,” either, but I know that it takes a lot longer to load and melt busheling than shred, and that affects tap-to-tap times, which seem to be critical these days.  

Reducing the price of any grade of scrap this month is going to be challenged by the freight market.  I have seen some incredible increases over March rates, and I doubt they will come down even if oil prices begin to drop later this month.

So we are probably once again ignoring the law of supply and demand, but it has happened before.  My question is between now and November will we see a repeat of last year’s market dynamics?