Tight supply poised to keep recycled steel prices buoyant

Multiple reports in early March indicated that United States processing and trading sources were confident the March domestic mill buying season would result in more price gains for ferrous scrap.

In the previous two buying periods, waves of severe winter weather caused reduced generation and collection of recovered steel, allowing shippers to ask more per ton for scrap that, in the case of some mills, was needed to restock their inventories at the start of a new year.

If mills and foundries pay more for their scrap this spring, weather seems less likely to be the culprit. That begs the question if supply is remaining tight for economic reasons or if demand has strengthened compared with several months earlier.

The U.S. economic outlook in early 2025 has been murky for several reasons, but some of the murkiness starts at the top—in the White House.

After a recycling executive expressed his dismay about back-and-forth tariff policies to Recycling Today in February, a supplier to the metal recycling sector has expressed a similar sentiment in March.

“Everyone I talk to is just frustrated with the back-and-forth statements and shifting deadline dates,” he says. “How do you conduct transactions let alone make investments in that environment?”

Business planners seem to have expected a turbulent transition from the prior presidential administration to the current one, with several January economic indicator-related statistics pointing downward.

In mid-February, the Rolling Meadows, Illinois-based Metals Service Center Institute reports that shipments of aluminum products from U.S. service centers decreased by 9.8 percent this January compared with shipments in January 2024, while steel shipments declined by a less noteworthy 1.4 percent.

Prospects in the metals-intensive automotive sector also seemed uncertain, at least by one statistical measure. Wards Intelligence reports light vehicle (autos, pickup trucks and SUVs) production in North America fell by 10 percent year on year this January. Winter weather could have been a factor in auto sector demand and production, according to Wards.

The construction sector has been a bright spot for both generation and demand in the years of rebound from COVID-19 restrictions, but early 2025 indicators are flashing yellow lights there, too.

According to the Arlington, Virginia-based Associated General Contractors of America, while gains were made in residential and overall nonresidential sector employment statistics early this year, by the end of January, 2,300 fewer people were employed by heavy and civil engineering firms and another 1,900 jobs were shed in the specialty trades.

A potential dark cloud hanging over the construction sector can be found in January architectural billing index survey results, with figures for all four U.S. regions checking in below the break-even number of 50.

Survey results gathered for the American Institute of Architects (AIA)/Deltek Architecture Billings Index (ABI) show the U.S. West as having the highest index figure of 48.8, followed by the South at 46, the Midwest at 45.6 and the Northeast at 41.1. Any score below 50 indicates decreasing business conditions, according to the report.

“Billings remain weakest at firms with a commercial/industrial specialization,” AIA and ABI say, with a national average index figure of 43.1 in that category. That is followed by a 45.0 figure for the residential sector and a 47.1 index figure for the “institutional” category.

As of early March, neither the tariff uncertainty nor a lukewarm export market for American recycled steel had dimmed upward price momentum.

On the export front, in the first week of March, Davis Index reported mills in Turkey had purchased 60 percent less imported scrap from the U.S. this January. That was helping lead to prices that were not moving upward there in March.

Offering better news the same week, Davis Index listed shredded scrap at an average of $431 per ton to domestic mills in the U.S. in early March, holding onto price gains that have accrued throughout the year.

Mill transaction figures gathered the Raw Material Data Aggregation Service of Pittsburgh-based MSA Inc. show No. 2 shredded scrap having moved beyond the $400-per-ton threshold this February for the first time in 10 months.

Sellers, buyers and processors of ferrous scrap likely are watching the news with particular attention this spring as they try to gauge the health of both the domestic steel industry and the overseas trading sector.

While domestic steelmakers want tariffs to supply them with a bigger piece of the pie, historically, the question can become whether the size of the overall pie begins to shrink.

Through the first two months of 2025, the Washington-based American Iron and Steel Institute reports year-to-date steel production at 14.18 million tons, down 1.3 percent from the nearly 14.4 million tons made during the same period in 2024.