US steelmaker Steel Dynamics (SDI) expects stable domestic ferrous scrap pricing through the year-end, following near-record scrap shipments in the third quarter.
Domestic ferrous scrap prices have been flat or lower over the last seven consecutive months, despite higher scrap utilization rates driven by 50pc tariffs on steel imports.
Scrap consumption has not kept pace with higher steel production rates this year, in part from supply and demand dynamics, and because some newer production mills are using virgin iron metallics, chief executive officer Mark Millett said on an earnings call Tuesday.
Lower ferrous scrap export volumes have also been a major catalyst for lower domestic scrap prices, but the company did not elaborate.
National average #1 busheling prices have cumulatively fallen by $18/gross ton (gt), while shred prices have declined by $25/gt year to date.
SDI said ferrous scrap prices have now stabilized and will remain steady in the fourth quarter, barring seasonality. Their outlook comes despite numerous months of lower pricing and widespread market uncertainty following the October domestic trade over whether prices reached a temporary floor.
Still, the November-December period is historically volatile for ferrous scrap grades because of seasonal slowdowns and holiday disruptions which reduce processing and shipping days.
National monthly average shred and #1 busheling prices in November and December have only declined twice in the last four years during these months. The declines happened in October-November 2022 and then again in November-December 2024.
SDI's recycling segment posted an operating profit of $32mn in the third quarter, up from $10mn in the prior year. Near-record ferrous scrap shipments and metal spread expansion drove the gains.
The company shipped 1.59mn gt of ferrous scrap in the third quarter, up 9pc from 1.46mn gt a year earlier. Its external shipments rose marginally to 538,000gt.
Average external finished steel sales prices in the quarter rose to $1,119/short ton (st), up from $1,059/st a year earlier. The company's ferrous scrap costs across its electric arc furnace steel mills averaged $381/st, up from $367/st a year earlier.
The increase in external steel sales prices outpaced the slight increase in ferrous costs, which widened SDI's scrap/steel spreads to $738/st, up $46/t from a year earlier.
SDI posted a profit of $404mn in the third quarter, up from $318mn a year earlier.
