US ferrous market exhibits upward pricing pressure: Davis Index

After enduring a year of predominantly sideways to downward recycled steel pricing, scrap processors may finally have un upward price movement to look forward to in January 2025.

Domestic mill buying discussions in the second week in January point to a situation where several mills in the United States need to rebuild their scrap inventories at the same time ferrous scrap generation, collection and trucking is facing obstacles caused by winter weather.

Initial conversations are leading some buyers and sellers to conclude that ferrous scrap prices in the U.S. are likely to rise by as much as $20 per ton this January, according to commodities information service firm Davis Index.

Davis Index reports some processors are willing to sell in January at the same per ton prices as the previous month but others are “likely to withhold tonnage from sideways bids” after hearing about the $20 per ton rise in some locations.

Adds the information services firm, since “steelmakers want to restock several mills nationwide [then] buyers refusing to increase prices will eventually correct their position in the next few days.”

One of the higher bids reportedly accepted was in the Southeast, where a load of machine shop turnings was purchased for $30 more per ton in January compared with its December price.

Mills in that part of the country may be finding themselves seeking inventory at the same time two consecutive winter storms have snarled traffic (and recycling collections) in parts of the South, the Ohio Valley area and the Mid-Atlantic region.

An early January form affected flows in a west-to-east belt from Kansas to Maryland while just a few days later another snow-and-ice-laden winter storm is moving on a predicted west to east route from New Mexico to the Mid-Atlantic states.

If the second storm front moves as predicted, it would hamper collections and trucking service in several metropolitan areas in Arkansas, Tennessee and the Carolinas and may also hit Atlanta.

In addition to transportation woes, the two storms are likely to reduce scrap-generating demolition and construction activity in a wide stretch of the South. Thus, outdoor jobsites that already had been slowed by holiday schedules might be further delayed by severe winter weather (which also will include colder temperatures).

Domestic and overseas scrap demand could be a mitigating factor in the ferrous market. In the U.S., the Washington-based American Iron & Steel Institute (AISI) has reported that 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 the Dec. 28, 2024, American 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 in January, the steel recycling export market seems unlikely to add any upward price pressure, according to tracking by Davis Index.

Even with the threat of a work stoppage slowing outbound traffic at ports in the U.S. Northeast and South, bulk shipments of heavy melting steel (HMS) shipped from New York were trading for just $315 per metric ton in January—below the price the grade was fetching in December.

On the West Coast, conditions seem no better. Davis Index has HMS bulk cargoes leaving from Los Angeles as being purchased for just $306 per ton. That figure, as in New York, represents a lower price compared with what shippers were receiving in December.