Since the beginning of the year, the ferrous scrap metal market has been on a rocky road, marked by two consecutive months of falling prices. Looking ahead, planned mill outages and seasonal fluctuations in collection rates could potentially drive scrap prices lower over the following two months. In contrast, the non-ferrous scrap market has experienced a slight increase due to enhanced overall demand.
Chicago’s Ferrous Scrap Metal Market
Chicago ferrous scrap market crumbled to downward pressure, with March’s market experiencing a decline ranging from $20 to $60 per gross ton. The market was shaped by a combination of factors including canceled orders, scheduled mill outages, waning domestic demand, limited export competition, and decreasing prices for both finished steel and pig iron. Prime grades saw a reduction of $60 per gross ton, cut grades fell by $40 per gross ton, and machine shop turnings declined by $20 per gross ton. The price difference between Busheling and shredded scrap is merely $5 per gross ton, suggesting that if Busheling’s price falls further than that of shredded, it could lead to an inversion of their pricing, making shredded the higher-priced grade.
“In Chicago, every pound of scrap was purchased TBD, states Lou Plucinski, President. “Despite weak demand, every March program in Chicago was under contract by March 1st. The question remains, how does one determine the market value when there is not any trading?”
Falling finished steel prices continue to drive ferrous scrap metal’s negative outlook. Currently, the price gap between hot-rolled coil (HRC) and #1 Busheling has narrowed to $423 per short ton, marking the smallest spread since mid-October. The significant drop in prices over the past few weeks was unexpected. Customer demand is diminishing as buyers anticipate further decreases, holding out for the lowest point. Additionally, lead times have shortened to approximately 3 weeks over the past month.
By scheduling maintenance outages, steel mills will regulate the supply and price of finished steel. There’s no doubt that scrap metal demand is waning leading some mills to cancel unfulfilled February orders, and purchase only half of their usual amount for March. According to Fastmarkets, maintenance outages could slow the recent decline in HRC prices and are expected to result in a reduction of steel production by approximately 301,000 to 306,000 tons.
Breaking News: there may be a light at the end of the tunnel. At least two US flat-rolled steel mills have initiated efforts to raise their base prices for sheet products. On Thursday, March 7, Cleveland-Cliffs increased its minimum base price for hot-rolled coil to $42 per hundredweight ($840 per short ton), with the hike taking effect immediately. Nucor has also increased its minimum base price to $41.25 per hundredweight ($825 per ton), effective immediately. This adjustment also impacts the prices of cold-rolled coil and coated products, as detailed in a letter from the company.
Chicago’s Non-Ferrous Scrap Metal Market
The stainless steel scrap sector in the United States has witnessed a minor uptick, with an across-the-board rise in 300-series prices, contrary to the downturn in the ferrous scrap market for March. Just a month ago, there were concerns surrounding the LME Nickel price nearing $7.00/lb. and the downward trend in stainless steel scrap prices. However, as the first week of March 
trading concludes, the LME Nickel price has surged past $8.00/lb, resulting in an approximate 10% increase in prices for 300 series stainless steel scrap. Meanwhile, prices for 400-series grades of stainless steel scrap remain stable due to robust overseas demand, but they are anticipated to decrease amidst a sluggish domestic ferrous trade this month.
Aluminum scrap prices have maintained consistency on a month-to-month basis, supported by robust demand from primary and secondary consumers across both domestic and international markets. The LME Aluminum price has shown minimal fluctuation, hovering just below $1.00/lb. Most aluminum scrap prices are holding steady, with market sources observing indications of liquidity.
Copper prices have seen an upward movement this week, with the Comex price currently exceeding $3.90/lb. However, gains in copper prices are constrained by ongoing concerns about weakening demand from China, the largest consumer of copper globally. While a depreciating U.S. currency may make metals more affordable for countries like China, concerns persist regarding various economic challenges within China, including a property crisis, deflation, stock market volatility, and rising government debt, all of which are prompting calls for support for economic activity from the country’s leadership.
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