A mammoth winter storm that swept across the eastern half of the US from Texas to Massachusetts took numerous scrap yards off line today and could curb inbound flows for the remainder of the week.
The disruption to scrap collections will likely lead to a supply-driven February scrap market in which prices could rise for the third consecutive month. National average prices for shred rose by $50/gross ton (gt) over the last two months, while #1 busheling increased by $30/gt.
Most scrap yards surveyed by Argus said they would be closed on 26 January and potentially 27 January to concentrate on snow and ice removal.
Many scrap dealers said they would not complete January ferrous scrap deliveries until the first half of February, because of these recent closures and seasonal supply constraints leading up to the storm.
Scrap yards in the upper Midwest have been dealing with frigid temperatures that have taken some equipment offline and curbed scrap collections.
The carryover of shipments into February and additional threats of wintry weather could influence suppliers to be more conservative on spot sales in the upcoming trade.
This could leave mills that had attempted to restock in January with low inventories heading into the February trade and hungrier for scrap than expectations immediately following last month's trade.
Snow and ice could also have a congestion effect on some forms of transportation. Some sellers who deliver by rail said they would have less trouble completing January orders. But other shippers mentioned that rail service has been spotty this month, adding to logistical challenges for scrap buyers and sellers.
Industrial generation of #1 busheling has also been slow coming out of the holiday season, scrap yards said. That could support prime scrap prices in February, but lingering supply surpluses of #1 busheling have caused some yards to run that grade through their shredders.
Typically, #1 busheling carries a premium to shredded scrap because it has fewer impurities for steelmaking than shred. But seasonal shredder feed supply curtailments caused the spread between #1 busheling and shred to fall to $2/gt last month, the narrowest such margin since March 2024.
