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Steel scrap prices increase 25% this month!
12/22/2009
Steel mills use cost inflation to justify price hikes
Tom Stundza -- Purchasing, 12/23/2009 12:28:25 PM
Shredded-steel-scrap prices have increased 25% this month, setting the stage for the higher steel prices being proposed by mills for January and February deliveries.
Midwest shredded scrap in bundles is at $293/gross ton on average this month, up from $235 in November. Consequently, steel mills claim that hot-rolled sheet in coil prices for January and February deliveries to service centers already are around $580/ton, as compared with $500 price average reported by end-use buyers for December.
Demand for steel products remains weak as the year ends, and there are no visible signs of near-term demand catalysts among the numerous metalworking sectors. Yet, several major steelmakers have announced price increases for January and February deliveries of sheet, plate and bar steel products. In the view of several analysts, this is an attempt to keep prices from dropping any further than the low December transaction-price averages and to recover scrap-cost increases.
Independent steel market analyst Michelle Applebaum suggests the first-quarter domestic steel-price increase in the face of a relatively small pickup in demand "is based on a combination of fear of further price hikes due to surging raw materials, seasonal factors, and near-record-low domestic prices." She says "it's the smoke that is driving the surge, not even fire." That raw materials cost hike is because renewed offshore demand, especially from China and Turkey, has drawn down inventories, suggests an analysis by TD Bank economists.
The latest Scrap Price Bulletin has a No.1 dealer bundle reference price at $330/gross ton, up $70/ton from November. The "SteelBenchmarker" market survey has No.1 Heavy Melt Scrap for early December at $253/ton, up from $222 in mid-November and the No.1 Bushelings price at $318/ton, up from $267. "The trade press already is talking about higher scrap quotes for January," writes Purchasing.com blogger Bob Garino, the director of commodities for the Institute of Scrap Recycling Industries. "If that's correct, we could be looking at No.1 bushelings at $350+/ton next month."
Meanwhile, the TED Bank analysts write that "spot feedstock shortages for domestic integrated mills have led to much more aggressive bidding activity for scrap." And that's coming at a time when midwinter inventory replenishment by the scrap industry "is both untimely and costly." Reason: The low industrial activity levels at metalworking companies especially with reduced scrap supply, and increased price offers from the scrap yards.
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Thoughts for Today
1/1/2009
Trust in the Lord with all your heart; do not depend on your own understanding.
Seek his will in all you do, and he will show you which path to take. Proverbs 3:5,6 (NLT)
The desire to succeed means nothing without the will to
prepare.
Commit to the Lord, whatever you do, and your plans will SUCCEED!
Prov. 16:3 (NIV)
“Unless we know what we're willing to die for, we may never figure out what we're living for.”
Unknown Source
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