US ferrous: Northern markets slide in November

Spanish Market: Metals
09/11/22

Ferrous scrap domestic trading in northern US markets wrapped on Wednesday, with steeper declines than in the south as captive supply met tepid mill demand.

Trading in Chicago, Cincinnati-Indianapolis and Iowa, concluded mid-week, with broad trends of primes down $30/gt and shredded scrap down $20/gt from October.

This month was characterized by limited demand across the region, headlined by weaker programs in Chicago and Detroit as mill orderbooks and outages continued to undercut.

Multiple sources also estimated that mills have already sought to keep end-year inventories under control, despite some expected rebound in both finished steel and scrap markets in the first quarter.

Prime grades of scrap remained the weakest in November, reflecting not only fairly consistent generation but also mill melt ratios, which have favored shredded scrap to blend against higher cost metallics.

The scenario was similar in October but played out more widely in November compared to trends in southern markets as low Mississippi water levels raised both the costs and logistical difficulties of shipping scrap from the north to markets in the south. Although rail shipping provided some outlets for scrap, this exacerbated supply-demand fundamentals in general across the Midwest.

#1 busheling prices in Chicago fell by $30/gt to $335/gt. In Cincinnati-Indianapolis, the prices declined to $308/gt from $338/gt, while the Quad Cities in Iowa were $330/gt from $360/gt a month earlier.

Meanwhile, slowing inbound flows reportedly accelerated this month amid lower collection prices and colder weather, still shredded scrap supply was largely sufficient to meet mill demand. As trading continued, some dealers pressed for only $10/gt but in almost all cases met with no success.

Shredded prices in Chicago fell to $345/gt from $365/gt in October. Cincinnati-Indianapolis shredded prices were assessed at $330/gt, down from $350/gt, while in the Quad Cities declined to $335/gt from $355/gt.

Cut scrap mirrored shredded declines of $20/gt leading to a further tightening and in some cases a matching of 5ft P&S prices to #1 busheling.

Trading in St Louis was nearly flat in limited but fairly steady demand. In addition, suppliers were able to tap into comparatively better trends heading into Arkansas and Tennessee as the regional proximity offset still high barging costs.

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