Platts reported that after rebounding in December 2008 and holding ground in January 2009 amid lingering steelmaking malaise, US scrap prices have finally succumbed to downward pressure.
The Platts reference price for shredded scrap lost USD 25 moving to a new midpoint of USD 225 per long tonne delivered to Midwest mills. Buyers and sellers both reported February 2009 deals against the backdrop of dwindling scrap supplies and substantially weaker demand.
Some transactions actually began in the last days of January 2009, according to one Ohio Valley scrap processor with multiple yards. He reported selling shred for USD 225 per long tonne to 230 per long tonne, and said one large Midwest customer, a specialty steelmaker, was reducing its scrap inventory and therefore had a leaner buying program than usual.
The same source added that inbound flows were still inconsistent, could not be relied upon, and would continue to constrain the supply side. He added that there are definitely limitations on the amount of sales.
As per the source, heavy melting scrap was down USD 10 from USD 225 per long tonne and expected prime busheling to lose USD 20 per long tonne to USD 30 from about USD 260 delivered Midwest in January 2009.
One East Coast processor also noted supply side constraints. The problem is lack of flow there is only so much scrap to sell. He added that prices appeared to be slipping.
Nonetheless, the same person insisted that he was still filling orders for HMS at previous prices and was not anxious to book new orders at lower numbers.
A second East Coast processor put shredded scrap at USD 220 to USD 230 per long tonne with not too much demand. He said that two consumers, a mini mill and a specialty meltshop, had substantially curtailed their February 2009 buying programs in one case by more than 50%.
He added that export prices, which had been propping up East Coast prices for HMS and plate and structural grades, were already down USD 10 per long tonne from USD 225 per long tonne and USD 235 per long tonne, respectively. He suggested prices would move lower as export demand fell off.
A Midwest scrap processor agreed saying that it"s the same on our end, adding that he was negotiating sales for limited tonnages of shred at USD 225 per long tonne to USD 230 per long tonne gated Midwest mill. A Midwest mill buyer saw even more room for prices to fall further as a result of soft demand.