Recycled steel values rise in US

As winter storms hit portions of the United States, recycled steel sellers finally were able to receive several dollars more per ton in the January buying period compared with the prior month.

According to Davis Index, in the first half of January, average prices paid by domestic mills rose by $20 per ton or more in several U.S. regional markets.

A Jan. 13 report from Davis Index says prices for all benchmark grades of recycled steel settled at $20 per gross ton above December’s settled prices, noting those averages included incentives, corrections and premiums for certain grades.

The average gain was nearly identical for No. 1 heavy melting steel (No. 1 HMS), shredded and No. 1 busheling (prompt) benchmark, and in its report, Davis Index reports higher bids in markets including Chicago, Cleveland and Birmingham, Alabama.

While the price of prompt scrap, such as No. 1 busheling, can move differently when overseas buyers are active in the obsolete grade markets, in January, prompt scrap pricing followed the same pattern as shredded and cut grades—often rising by $20 per ton on average in the domestic market.

According to Davis Index, domestic mill buying discussions in the first and second weeks of January pointed to a situation in which several mills in the U.S. needed to rebuild their scrap inventories. Those discussions were occurring at the same time ferrous scrap generation, collection and trucking was facing obstacles caused by winter weather.

Some of the regional purchases exceeding the $20-per-ton average included a $30-per-ton boost for machine shop turnings in Cleveland and a $28-per-ton increase for the same grade in Birmingham.

While some processors were willing to sell in January at the same per-ton prices as the previous month, others signaled they were likely to withhold tonnage from sideways bids after rumors of $20-per-ton increases began to circulate.

Davis Index had predicted that because steelmakers want to restock several mills nationwide, what might follow would be buyers refusing to increase prices eventually will correct their position in the next few days.

As it has in the past, weather may have played a role in disrupting a previously existing supply-demand balance. Some of the worst weather hit metropolitan areas in the South that typically are the least prepared to cope with snowfall.

Mills in that region were seeking inventory at the same time two consecutive winter storms were snarling traffic and recycling collections in parts of the mid-South, Ohio Valley and the Mid-Atlantic.

An early January storm affected flows from Kansas to Maryland, while just a few days later, another snow-and-ice-laden winter storm moved on a predicted west-to-east route from New Mexico to the Mid-Atlantic. The second storm brought slick and even closed roads to several metropolitan areas in Arkansas, Tennessee, the Carolinas and Atlanta.

In addition to transportation woes, the storms reduced scrap-generating demolition and construction activity in a wide stretch of the South. Thus, outdoor jobsites that already had been slowed by holiday schedules further were delayed by severe winter weather, which also included colder temperatures.

Domestic and overseas scrap demand were a potential mitigating factor in the ferrous market.

In the U.S., the Washington-based American Iron & Steel Institute (AISI) reported through Dec. 28, 2024, domestic mills made slightly more than 87 million tons of steel. That figure—with just three days remaining in the calendar year—represents a 2.5 percent decline from the more than 89.2 million produced in 2023 (not including that year’s final three days).

Perhaps predictably, the holiday period restrained domestic steel output, according to AISI. In the week of Dec. 28, 2024, U.S. output was down 1.9 percent from the previous week. Domestic steel output then fell another 1.4 percent the following week, which included New Year’s Eve and New Year’s Day.

As of the second week of January, the recycled steel export market was thought to be unlikely to add to upward price pressure, according to Davis Index.

The threat of a work stoppage slowing outbound traffic at ports in the U.S. Northeast and South was watched carefully by the metals recycling industry. However, a tentative settlement announced toward the end of the first full week of January between the International Longshoremen’s Association and United States Maritime Alliance is poised to eliminate that risk factor.

Even when a strike loomed in early January, bulk shipments of HMS from New York were trading for just $315 per metric ton—below the price the grade was fetching in December.

On the West Coast, selling prices likewise remained suppressed. Davis Index had HMS bulk cargoes leaving from Los Angeles at $306 per ton in mid-January. That figure, as in New York, represents a lower price compared with the prior month.