Scrap edges down; steel jumps by $332 from Nov.

From Our Features

Scrap edges down; steel jumps by $332 from Nov. By Bryan Berry - Trend Analysis - February 14, 2011 The leading prime and obsolete grades dropped by $13-14 in Chicago from January to Feb. 7. The same grades – heavy melt, bundles, busheling, shredded, and 5-foot p&s – dropped by $15-$27 in Cincinnati. “The mills bought a lot of scrap in January – they overbought,” said one Ohio dealer. Nucor and Steel Dynamics in particular swelled their inventories in January. “Nucor has less demand for scrap in February,” said one midwestern broker. The scrap dealers offered no resistance to the lower scrap prices in February. They basically agreed with the steelmakers’ perception that scrap prices rose too much in January. “The market almost always goes up – and goes down – more than” people expect it to, said one Indiana dealer. “You don’t need prime scrap at $480 when the mills are at a 74-percent utilization rate,” said a Chicago broker. The continuing tight supply of obsolete scrap and the severe winter weather put a floor on how much prices dropped. Plus “the mills don’t want to jeopardize” the high prices they’re charging for finished steel, added the Chicago broker. The $900 (per net ton) finished steel prices so far in February are the highest they’ve been since October.