US ferrous: Mill demand drives January trade

The US domestic ferrous scrap market largely settled on Tuesday after a drawn-out January trade prime grades mostly rising $50-60/gt and obsolete grades up $30-40/gt from the prior month.

The January trade was most characterized by restocking activity among mills with larger appetites heightening regional competition. Stronger buying programs across flat-rolled steelmakers drove prime grade prices higher.

Tight supply met the uptick in demand, which when combined with the rally in export markets, ultimately drove prices higher this month.

The January gains though trailed behind some of the more bullish expectations prior to the trade largely because over carry-over volumes from December and pre-trade activity as mills worked to cover programs as early as late-December in anticipation of reduced availability.

Tiered pricing between primes and obsolete grades in most regions further moved to normalize the spread between #1 busheling and shred, which inverted five months ago.

Early expectations for the February trade remain mixed with market participants watching for improved scrap inflows to alleviate tight supply and whether export market strength persists over the coming weeks.

January trade recap

January market was slow develop with many regions not fully finalizing prices until early this week, days after Detroit mills entered the market at up $30/gt on obsolete grades and up $60/gt on primes.

Detroit mills concluded trade late last week at initial bid levels with #1 busheling up $60/gt to $420/gt from the previous month for January deliveries and shred and P&S 5ft up $30/gt to $420/gt and 375/gt, respectively.

Dealers and mills in Birmingham and the Carolinas remained in a deadlock on shred pricing until Monday when suppliers finally conceded to bids of up $30/gt for obsolete grades and $50/gt for primes.

Birmingham #1 busheling prices rose $50/gt to $445/gt delivered mill, while shred rose $30/gt to $430/gt delivered mill.

Pricing for shred and P&S along the Mississippi River market bucked the trend and rose $40/gt after some mills forced to return to the market this afternoon after coming up short.

Trading activity was similarly disjointed across the Ohio Valley and Pittsburgh markets as stronger buying programs increased competition between mills.

January pricing for both the Cleveland/Youngstown and Pittsburgh markets registered similar trends, with primes up $55/gt from the prior month with pricing split as some consumers entered the trade between $50-60/gt, while shred and P&S 5ft increased $40/gt and #1 HMS only logged a $30/gt increase as the grade was well supplied compared to demand.

Elsewhere, consumers in the Midwest were forced to pay above wider national trends in January, most notably for shredded scrap as they were hamstrung by tight supply and low inventories.

Shredded increases in Chicago and the Quad Cities exceeded the wider $30-40/gt across the country as early deals laid the foundation for a noticeable share of tons at up $45/gt and $50/gt in each region, respectively.

The situation was similar in Cincinnati-Indianapolis where outright sales were recorded in excess of the wider national trends despite fairly steady mill demand and more overall supply.

Although still below typical levels, improved demand in Chicago for #1 busheling lifted the grade widely by $60/gt to $425/gt — reasserting its premium over shredded for the first time since July 2022. Supported by this increase, prices for prime grades in the Midwest all fell into a narrower range of $410-440/gt.

Trends for other obsolete grades of scrap were closer to levels initially established in Detroit last week but still mostly higher in light of low comparative December levels and additional tightness in supply.

#1 heavy melt prices in Chicago rose by $40/gt to $335/gt in January, while the Quad Cities increased by $35/gt to $315/gt. Suppliers were able to notch a $40/gt increase to $380/gt in the Quad Cities as reduced inbound supply prompted many to push for a tighter spread to the $385/gt sales in neighboring Chicago.