The first quarter of 2015 saw ferrous scrap prices hit 6 year lows matching those seen during the financial crisis in ’08-‘09. Many of the troubling conditions hindering the ferrous markets as well as finished steel markets are continuing to linger into April. We feel these conditions will likely continue though the first half of this year.
With that said, we are seeing a hint of hope this month due to the recent decrease of scrap inventories available. This modest tightening in supply is reducing the overhang of surplus ferrous tons and equalizing these weakened prices to a more moderate “sideways” or unchanged level. Most of the U.S. scrap markets observed prices trading at unchanged levels from those offered in March. Some markets in the Western states saw a small $10 increase in scrap pricing as export pressures and the added freight costs out west primed steel mills to raise ferrous prices in order to secure tonnage necessary to meet their melts.
The ongoing cheap price of iron ore and semifinished products are keeping scrap prices low as traditional mills are left deciding whether to melt scrap or these other cheap products. This competition for the furnace is hurting the upside price growth for ferrous scrap grades. Also thwarting stronger scrap prices are cheap new steel imports flooding the market keeping the pressure on U.S. mills and service centers to keep finished steel prices low and further reinforcing the ceiling for scrap prices.
In closing, we do feel that the ferrous scrap market has bottomed out and clearer sky’s are distant on the horizon. We are relieved to finally arrive at the bottom of the market but cautious on the other hand due to the unfertile environment that currently exists placing pressures and prohibiting scrap prices from raising consistently in the near term.
Commodities in 2015 have struggled to make positive ground. Like oil prices, metals too have trended lower during the first quarter and remain volatile and sensitive to global economic news. Copper was volatile in March, prices fell $0.13 lb the first half of the month but rebounded nicely to close the month up 0.03 lb or 1.1% over the past 30 days. Aluminum also experienced a roller coaster month filled with peaks and valleys, but ultimately closed out the month with a modest loss of 1%. Unfortunately, nickel prices have not been as modest and continued their declining trend posting a dismal loss of 8%. This weakness in nickel will continue to translate into weakened stainless price as well as other nickel alloys.
Have a comment or prediction about the market? Share with us in the comments below.
Metro Group, Inc is located in Salt Lake City, Utah. visit main site>>