Prices paid for prime mini-mill grades like No. 1 busheling hit the $500-per-ton mark in Pittsburgh and Cleveland and a few dollars more for material sought from distant suppliers. In other key steelmaking cities, prices for both prime busheling and No. 1 bundles ranged from $480 to $495 per ton.
Shredded scrap and cut ferrous scrap like No. 1 heavy melt posted gains that matched or surpassed those seen for prime scrap. Shredded prices averaged between $470 and $480 per ton throughout the nation's northern industrial belt, while No. 1 heavy melt was being bought for as much as $440 per ton.
Several brokers said they believe that bad weather and the slower pace of scrap flowing into dealers' yards in the past month may be having an impact and spurring some mills to push for as much scrap as they can get.
Oddly, the usual price differential between secondary grades like shredded and No. 1 busheling almost vanished in some regions, with spreads averaging between $5 and $10 per ton, spurring some flat-rolled mills that had been avoiding prime scrap to leap back into that aisle of the scrap market.
One Chicago-based broker said the price spreads between the prime and secondary grades have narrowed because of the strength of export demand. Steelmakers in Turkey and other scrap-poor nations typically buy only heavy melt and shredded scrap, and little or no No. 1 bundles and busheling.
Another factor, he said, is that domestic bar mills have been more active than the flat-rolled steelmakers, and the bar mills normally use more heavy melt and shredded in their scrap mixes.
Shredded supplies were under pressure throughout the country, said one Midwest broker, who noted that in most regions shredded posted $75-per-ton gains to as much as $480 per ton. With better yields available from prime scrap like No. 1 bundles and No. 1 busheling, some mills were shifting their buying plans and scooping up as much of the industrial scrap as they could obtain.
Seasonal factors may be having an effect on supplies in dealers' yards, but the strength of demand from East Coast export yards is driving up prices for heavy melt and shredded. The docks reportedly were quoting prices of $400 to $410 per ton to local suppliers and as much as $450 per ton for heavy melt from suppliers in western Pennsylvania and eastern Ohio, industry sources said, at least $10 per ton higher than what was being paid by mills in key cities like Pittsburgh, Cleveland and Chicago.
Those prices and the seemingly looser specifications on heavy melt by exporters have lured some dealers to the docks instead of their local steel mills.
In the Midwest, weather conditions are choking off supplies. "Mills are looking for more tons than are available. Even with ArcelorMittal in Chicago sitting on the sidelines, scrap is tight in this region," one Midwest source said.
Midwest players are mixed as to where the market is headed after this round of deals is completed. "February pricing looks like it could increase a little, but I think mills are coming to the realization that there isn't that much scrap out there and they don't need to throw more than $50 to $60 at the market because it isn't going to secure any more tons," the Midwest source said.
Typically, price increases as steep as this month are followed by an equally steep drop the following month. But several traders and brokers said they believe that February will see little or no changes in prices, and possibly another modest move upward. Much of that speculation is based on the belief that many dealers have "sold paper" this month—in other words, they have booked orders from mills for scrap they don't have but are hoping to obtain before the end of the month.
Others believe the market peaked this month and will be headed downward. "I understand that most mills are booked through February and that a good amount of scrap will flow at current prices. I expect February to be stable but not higher," one industry source said.
A second Midwest source said scrapyards are looking to unload their inventories because prices are so high and some fear they could see a retreat from these levels.
Another broker said he believes there is still scrap overhanging the market. "I'm getting calls from dealers who rejected my offers of a $50-a-ton increase from last month's price level and are asking if that offer is still open," he added.
In the Southwest, the higher prices are bringing more material into scrapyards and the strong market conditions are expected to remain in February.
"We believe that February will continue to be strong, and we do not know at this time what might cause the market to slow down in March," a Southwest player said. Prices are up $50 per ton in his region, he said, adding that aside from tightness in cut grades, he has enough scrap to fill his orders.
A second Southwest source said that mills are hungry for material but he is concerned about whether the current conditions are sustainable. "Our local mill is offering $60 over last month's number, and they are looking for all the tons that we would like to sell," he said. "But I am not sure if we are at the peak. Are we headed back to a 2008 where the last quarter was horrible? I don't think so, but it can't keep going up."
Lisa Gordon, Pittsburgh, contributed to this story.
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