Scrap Prices North America
Don’t Expect a Surge of Scrap from the Storms
Written by Tim Triplett
September 28, 2017
Hurricanes Harvey and Irma were devastating for the many Americans still struggling to recover from the damage. But for the scrap metal market, contrary to common belief, the storms will be a mere blip.
“Everyone’s immediate reaction to Harvey is, ‘Oh, there will be so much scrap coming out of Houston, prices will drop.’ The reality, however, is quite different,” said Nathan Fruchter, CEO of Idoru Trading Co., a scrap trader and recycling consultant.
Any effect from the hurricanes will be delayed. It will take a month or two before scrap from the storm cleanup begins heading to the scrap yards, after the insurance companies have had a chance to assess the damage and basic infrastructure and services have been restored, he said.
When scrap from the storms does start flowing, it will be mostly household waste, white goods such as damaged appliances and some building materials like roofing and siding, which must go straight to the shredders. It won’t produce the higher quality HMS and P&S grades valued by the mills, he said.
In fact, in the short term, Hurricane Harvey may create a shortage of ferrous scrap, Fruchter said. If many of the Texas area recycling facilities are unable to ship their contracted tonnages to Mexico until the infrastructure is back to normal, the Mexican mills may look for replacement tonnage along the East Coast, eating into exports usually bound for Turkey.
“The scrap generated by Harvey is peanuts compared to the steel that will be needed to rebuild, Fruchter said.
Though the storms were a big disaster, their cleanup will have a small effect on the scrap market, agrees scrap consultant John Harris, CEO of Aaristic Services, Inc. He expects a heavy flow of light, low-density shredded material for a couple months before it peters out and the market returns to its normal course.
Thousands of cars and trucks were destroyed by wind or water. It will take months for processors to strip out the usable parts before sending the shell of the vehicles to the shredder. Shredded automotive scrap tends to have a high copper content that makes it unsuitable for remelting into certain grades.
Harris is among a consensus group of scrap experts who expect the price of scrap to decline by at least $20 per gross ton in October. Not because the storms have created an oversupply, but because demand for U.S. exports has declined in Turkey, and U.S automakers have curtailed some production. (See related story, SMU Sources: Ferrous Scrap Prices Softening.)
Tim Triplett
Read more from Tim TriplettLatest in Scrap Prices North America
Miller on scrap: Market deals with ferrous scrap dive
As the month of March goes into the second half, the scrap community is trying to cope with the large drop in ferrous scrap earlier this month.
HRC vs. busheling scrap spread narrows further in March
The spread between hot-rolled coil (HRC) and prime scrap prices has narrowed for the third consecutive month in March, according to SMU’s most recent pricing data.
Miller on scrap: March market recap
The ferrous scrap market experienced a sharp decline for March shipments. Prime scrap fell $60-70 per gross ton (gt) while shredded and other obsolete grades declined $40-50/gt. It seems these prices were accepted in the trade by dealers across the continent.
Ferrous scrap prices tumble in March
US ferrous scrap prices fell steeply in March for HMS, shredded, and prime scrap, sources told SMU.
March ferrous scrap market: Trends and turmoil
As I see it, the market looked to be a perfect storm for consumers this month while two large steel mills tried to put a floor on hot-rolled coil (HRC). One source speculated that “flat rolled mills coordinated their downtime and will take out 250,000 tons of capacity in April,” which made them attempt to put a bottom on flat-rolled product.