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US Ferrous Scrap Markets Settling Swiftly Amid Growing Upward Price Pressure
Feb 08, 2019

While the market closed in the key steelmaking city of Chicago at down $20 per gross ton for No1 busheling and no change in pricing for No1 heavy melt and shredded scrap, global dynamics with huge implications have come into play and are causing uncertainty among mills throughout the US. 

News that Brazilian miner Vale declared force majeure could increase integrated steelmakers' appetites for scrap metal in March, but could also raise costs for pig iron and direct-reduced iron since both of those products rely on iron ore as feedstock.

At the same time, the US export market is nearly sold out, with almost 600,000 tonnes of US ferrous scrap now committed to Turkey. The multiple cargoes have worked to eliminate an overhang of scrap in the market.

Philadelphia mills successfully secured No1 heavy melt and shredded scrap unchanged at $290 per ton and $310 per ton for February.

Meanwhile, two East Coast cargo sales to Turkey transacted on February 7 at $330 per tonne ($335.30 per gross ton) for an 80:20 mix of No1 and No2 heavy melting scrap (HMS) and $335 per tonne ($340.38 per ton) for shredded scrap. A third US cargo traded from the Gulf Coast to Turkey at $335.50 per tonne cfr. 

“These bulk sales to Turkey are going to put pressure on containerized scrap prices and domestic prices in the coastal areas. [Domestic mills] will definitely have to match export numbers in March,” an export source said.

Chicago and Cincinnati fell in line with Detroit and Pittsburgh, with No1 busheling dropping by $20 per ton while cut grades and shredded scrap held at January's price levels. No1 busheling in Chicago is selling at $355 per ton and in Cincinnati at $330 per ton for February. 

Buyers and sellers in Cleveland battled over the price of No1 busheling on February 7, with the $20-per-ton reduction sticking because mills there were not willing to buck the trend set by other northern markets. In January, No1 busheling in Cleveland traded at $400 per ton, which represented the highest price paid for the material throughout the US. 

One Cleveland mill source said it was preposterous that mills in Cleveland should only get a $10-per-ton discount on prime when the city is literally surrounded by Ontario, Pittsburgh, Cincinnati, Chicago and Detroit, which settled at a $20-per-ton discount for prime.

Lisa Gordon in Pittsburgh contributed to this report.