Winter supply hiccups spur ferrous price boost

Travel-impairing winter weather that hit several regions of the United States in January has continued into the first two weeks of February. The subsequent pinching of ferrous scrap generation and transportation are being cited as factors causing recycled steel prices to rise in both months.

For scrap generators, collectors and processors, a rise in ferrous scrap pricing almost certainly felt long overdue as new calendars were placed on the wall this January. While winter weather can be unhelpful in terms of scrap inflows, an increase in the value of inventories and receipts from mills, foundries and brokers likely is more welcome by processors and sellers.

After shredded scrap ended the year selling at less than $375 per ton on average, as of this week pricing service Davis Index has U.S. mills paying an average of $406 for the material.

A recycler whose company does business in several U.S. regions predicts the price for shredded and other benchmark grades will rise during the rest of the month.

Recapping January’s events, the processor and trader tells Recycling Today, “The polar vortex, for most of January, was the pivotal event escalating the upturn of scrap prices. Cold weather and storms reduced scrap intakes by over 40 percent in some regions in January.”

Continues the trader, “This was after mills overdid inventory reductions in November and December of last year. The net effect was too little scrap at a time when there was some modest restocking started in January, and scrap prices increased by about $20 per ton.”

Weather service AccuWeather is predicting more disruptive weather in the days ahead, including a series of two or even three ice and snowstorms for parts of the Midwest and Eastern U.S.

“After all settles, the market will be up by more than $40 for shred and busheling and more than $30 for cut grades in February,” predicts the processor. “Scrap flows are still lethargic, and weather is still a factor nationally affecting scrap availability,” he adds.

Also in February, American steel mills enacted price increases for hot-rolled coil (HRC) steel, rebar and other mill products. Metals industry analysts have cited rising scrap costs as well as a 25 percent tariff on inbound steel announced by President Donald J. Trump as contributing factors.

The Steel Manufacturers Association (SMA), which represents recycled-content electric arc furnace (EAF) steelmakers, has endorsed the tariff regimen as supportive of its own sector and American industry overall.

The recycler contacted by Recycling Today is not as uniformly supportive, remarking, “There is more optimism and concern about the tariffs. While tariffs could help some, it hurts others, including the all-important [household] consumer.”

Before the White House announced its across-the-board tariff on all inbound steel, it had announced and then delayed tariffs on all inbound materials and products arriving from Canada and Mexico.

Such start-and-stop actions emanating from the White House do not sit well with business planners, says the recycler. “It’s less about the tariffs and more the uncertainty that creates the concern. How do you plan for the unknown? Unfortunately, chaos is the agenda for the next four years.”

While weather and political chaos have contributed to a boost in ferrous scrap prices domestically, overseas buyers without a front row seat to the weather or political drama have been slower to react to rising prices.

Only in the middle of this week have reports by Davis Index started to indicate that buyers representing mills in Turkey and the Indian subcontinent are recognizing the need to make higher offers for U.S. scrap.

Atilla Widnell of Singapore-based satellite tracking and analysis firm Navigate Commodities, says traders overseas and within the U.S. should refer back to the first Trump administration and its set of tariffs to predict pricing circumstances in the rest of 2025.

In a recent note and LinkedIn post, Widnell writes in part, “Domestic U.S. flat-rolled HRC benchmarks surged 40.9 percent (or $270 per short ton, to $930 per ton) in the seven months after the implementation of President Trump’s first round of tariffs [in] 2018.”

Calling those increases “a harbinger of things to come in 2025,” Widnell says American buyers of HRC, along with galvanized steel and tubes and pipes, are among those who “will likely feel the most pain” as post-tariff pricing sets in.

In the first five weeks of 2025, mills in the U.S. operated at 74.2 percent of capacity, according to the Washington-based American Iron and Steel Institute (AISI).

Although the nation’s mills produced about 0.3 percent, or 23,000 tons, more steel in the first five weeks of 2025 compared with early 2024, the mill utilization rate was down from 75.4 percent from early 2024 because of added capacity.

Looking back to 2018 for his example, Widnell says the new tariffs—if they stay in place as announced without exemptions—could cause the U.S. mill capacity rate to rise by from 10 to 15 percent as the year plays out.

On the finished steel pricing front, Widnell says it would not be surprising to see the sale price of HRC increase by up to 40 percent in the U.S. this year, as it did in 2018.

For recyclers, that could mean a buoyant scrap price, while for overseas buyers it could mean they will have to compete more aggressively with U.S. mills to keep the trans-oceanic spigot open.