Ferrous scrap markets are seeing a bump in pricing this month with a gain of $10/GT locally, totaling an increase of $20 GT since the market bottomed in March. The Chicago and Alabama markets, where prices have remained fairly flat since February, started their rebound this month with the country’s biggest gains as prices increased $20-$30/GT. This comes as mills are looking to increase inventories and improve scrap flows which have been weaker during the recent downturn. Prices on new steel products have also seemed to solidify adding confidence to the mills and scrap dealers that positive ground likely in the future. This uptick in pricing has helped garner some positive sentiment within the scrap market, but is also met with some skepticism due to several factors holding a ceiling over pricing. These factors as mentioned in previous market reports comprise of the strong US dollar that turns away potential export buyers, cheap and plentiful scrap substitutes in the market, and the recent slowdown in the oil/gas manufacturing sector resulting in curtailed industry related steel products. We feel prices will continue to slowly claw themselves back out of the dark hole they fell into early this spring.
Base metals had a terrible May as prices on copper, aluminum and nickel (stainless) all fell pretty significantly. Let’s look at aluminum first as it’s the worse off. Aluminum prices on the LME have fallen 10 cents, a 12% decline, during the past 30 days. Aluminum prices looked to be gaining some steam, slowing raising thru April but quickly reversed their course in May. Adding to aluminum’s price woes, the market is currently oversupplied with a glut of available scrap. Mills are purchasing for August and September deliveries and taking advantage of their current leverage positions. Nickel prices too struggled to find positive ground, down 9% in May. Stainless steel prices decreased 5 cents during the past 2 weeks as a result of weaker nickel prices. Copper by a percentage comparison has weathered the past 30 days in a better fashion but still lost over 20 cents, or 7%, during this same timeframe. Base metals seem to have found a floor this week as prices fluctuated in a narrower range than previously experienced but remain vulnerable and could easily give way to weaker pricing levels.
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