Commodities

Obsolete grades lead ferrous price rise

After weathering seven consecutive months of falling ferrous scrap values, processors of iron and steel scrap finally saw their inventory regain a little value in early December 2022. Recyclers and traders indicate tight supply finally kicked in as a factor, boosted by increased demand from overseas.

Scrap prices that started last year on a high note helped keep material volumes healthy throughout the first seven months of 2022. But as prices declined steadily from May through November, processors started telling Recycling Today Media Group (RTMG) in the fall about double-digit year-over-year declines in volume.

The accumulated supply seemed to keep pace with lukewarm domestic and global demand until late November. “The market did move, finally,” one trader tells RTMG in mid-December, after U.S.-based shippers were able to squeeze a few more dollars per ton from domestic mills and overseas buyers.

That same trader also predicted “a Turkish buying wave,” which was among the factors prompting a $53 per ton rise in value for scrap at the port of New York.

Metals information service Davis Index tracked that price increase. The company had its heavy melting steel (HMS) Nos. 1 and 2 blend freight on board New York Port price bottoming out at about $304 per ton in mid-November. By the week ending Dec. 12, the same grade outbound from New York had climbed to $357 per ton in value, according to Davis Index.

In the domestic market, the benchmark prime grade No. 1 busheling also bottomed out in mid to late November, declining to a low of $345 per ton. Davis Index says domestic mills finally paid more for the grade the week ending Dec. 12, though it recorded just a $10 per ton rise.

Obsolete grades might be rising faster because of overseas demand and because light-scale traffic has put shredder feedstock and HMS-grade material in comparatively short supply.

A Midwestern recycler tells RTMG that “production scrap is flowing,” with inbound scrap volumes being “very good.”

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