The beginning of the new year brought hopeful anticipation for a little boost in scrap steel prices but our hopes were squashed early in January as mills quickly took the upper hand and left prices unchanged from December levels. Historically, the first quarter brings a sense of price optimism in anticipation of increased demand for new steel products typically seen during the spring months, however, the market for scrap metal feels very different this year. Many publications and analysts we are following today are predicting more weakness for scrap prices in 2015, some predicting the market to fall another $50-70/Ton this year. They are also predicting softer new steel prices, ranging from a $30-40/Ton slide due to stiff pressure from cheaper import products, cheaper energy costs, and low cost raw materials . It’s obviously early in the year to believe all these predictions about steel prices but they have some interesting points to take note. One common thread for a weaker environment is the soft seaborne iron ore prices coupled with a strong dollar keeping many export buyers on the sideline. This continues to leave the US market flooded with ample scrap supplies thus keeping prices volatile and at the mills mercy.
December was another troubling month for base metals. Copper prices lost 10 cents a pound (-3.4%) during the month while aluminum prices suffered much more losing 12% or 11 cents/lb. Nickel prices too are back on the losing game after a strong rebound in November, prices fell 23% in December, losing about a quarter of its value in 30 days. This loss in nickel value is having a negative impact on stainless prices and nickel containing alloys. Like ferrous metals, the weakened prices are largely do to the stronger dollar (takes less $ to buy the same pound of metal, thus reducing the price), an ample supply of scrap available in the market (especially aluminum) and the lack of export demand into Asia.
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