December 03, 2008

RMDAS ferrous scrap pricing climbs back in March

Recycling today recently reported that after a slight downturn in February 2008, prices paid for ferrous scrap moved back up in March 2008. As per report mills paid from USD 7 to USD 33 more per ton for scrap, depending on the grade and region and Shredded Scrap hit USD 400 per ton in the North Midwest Region.

Reported regional aggregated spot market prices compiled by Management Science Associates, Pittsburgh through its Raw Material Data Aggregation Service showed that mills paid in a range of from USD 418 to USD 435 per ton for the new production scrap used to define the Raw Material Data Aggregation Service Prompt Industrial Composite grade.

Regionally, the South showed the least volatility in March, with mills on average paying just from USD 7 to USD 11 per ton for their scrap, depending on the grade. In the North Midwest region prices jumped the most, moving up from USD 22 to USD 33, depending on the grade.

Steelmaking continues to be a growth industry, with figures compiled by the International Iron and Steel Institute for February 2008 steel production showing growth 5.3% YoY growth over February 2007. The 66 nations reporting to the IISI churned out some 107 million metric tons of products in February.

However, a moving annual total growth rate calculated by the institute has shown a slowdown from a peak in March 2007 of 10.8% to 6.2% for early this year. In particular, China’s moving annual total growth rate has slowed from 21% in February 2007 to 12.1% in February 2008. A slower growth rate may finally ease some of the pressure on ferrous scrap supplies and help the market achieve something closer to equilibrium. A question remaining, however, is whether the ongoing global production of so much steel will require a lengthy time horizon for scrap supply to begin reaching a point where buyers do not feel strained to obtain adequate supply.

A shredder operator in Texas said that for now, looking for supply and keeping up with demand continue to make the world seem like a busy place for scrap recyclers. “We’ve got a lot going on and we’re short-handed.”

The Raw Material Data Aggregation Service Ferrous Scrap Price Index is based on data gathered from a statistically significant compilation of verified ferrous scrap purchase transactions.