Following a stable September, the ferrous scrap metal market in Chicago remained unchanged for October, marking the third consecutive month with industrial-grade scrap prices at a standstill – despite other regions experiencing their first price increase of the year.
Chicago’s Ferrous Scrap Market
Ferrous scrap metal prices in Chicago remained steady at September’s levels across all grades, with prime and cut grades still holding at June’s price levels. Although tight scrap supply, increasing export demand, and an upward trend in the futures market have contributed to some stability, there have been no significant changes in the market for the past three months. Hot Rolled Coil (HRC) prices continue to hover in the low $700s per short ton, while ongoing mill outages have kept downward pressure on the market, contributing to the stagnant pricing.
While Chicago and Detroit’s scrap metal prices held flat, markets in Cleveland, Houston, Philadelphia, Alabama, and Arkansas-Tennessee saw scrap prices increase by $20 per gross ton. The South’s price surge was driven by factors like a strong export market, Hurricane Milton, and a major producer’s urgent need for scrap. Looking ahead, market sentiment is divided, with some predicting further increases while others anticipate a continuation of the sideways trend in November.
“The best way to describe October is that the mills came out on top once again. Local TBD mill buyers gained from the published prices, but a robust market along the river helped shield Chicago’s index from any hidden premiums. While Fastmarkets reported prices as stable, scrap demand has been the strongest I’ve seen all year. This might finally be the light at the end of the tunnel we’ve been anticipating,” stated Lou Plucinski, President.
Major mill outages are ongoing in key regions such as Chicago, Pittsburgh, Texas, and the Carolinas, each affected by two significant disruptions. The Arkansas-Tennessee region is also facing five scheduled outages. These shutdowns, which began in August, have softened scrap demand, contributing to the market’s sluggishness through October. While most outages are expected to wrap up by late October, some will extend into November and December, potentially offering relief as production ramps back up.
The U.S. ferrous export market has been mixed, with the East Coast seeing a rise in prices and the West Coast experiencing declines as of October 9th. The East Coast benefitted from a recent sale to Turkey, pushing prices higher, while weaker demand in Bangladesh pressured West Coast prices lower. Despite this disparity, exporters are uncertain about the market’s future direction. The East Coast market is expected to stabilize, with current price fluctuations reflecting regional differences in international demand and scrap availability.
Chicago’s Non-Ferrous Scrap Market
In October, non-ferrous trading markets are experiencing gains, though some of the increases in Comex and LME prices are being dampened by weak demand. Copper prices have risen by 11.5% month-over-month, but buying spreads have widened.
LME aluminum has also seen an increase, trading up over 8% this month, which has slightly boosted the value of prime aluminum scrap grades. However, secondary grades such as aluminum cast, aluminum turnings, and irony aluminum have not experienced any increase due to weak demand and minimal trading activity. The overall outlook suggests that demand for secondary products will remain soft for the rest of the year.
The stainless steel scrap market remains relatively weak in October 2024. Prices for major grades like 304 and 316 stainless steel have been stagnant, primarily due to weak demand and declining nickel prices. Nickel has significantly underperformed on the LME this year, which has added to the downward pressure on stainless steel scrap prices. Additionally, U.S. stainless steel production dropped by 13.5% in the first half of 2023, further contributing to the sluggish market. Globally, the supply of stainless steel scrap is tight, particularly in Europe and North America, where manufacturing activity has slowed. Some analysts anticipate a slight recovery in demand towards the end of the year, but overall sentiment remains cautious.
