U.S. scrap steel prices are expected to move upward yet again in April, bringing Purchasingmagazine's monthly scrap steel price index closer to the 432.0 cyclical peak of August 2008 after reaching an 18-month high of 324.6 in March.
"The guess for April calls for higher scrap prices," agrees commodity analyst and Purchasingcolumnist Bob Garino. "Price drivers include tight but improving supply conditions coupled with domestic and offshore demand." In fact,steelmakers may see April 2010 costs up by $20-to-$60 per gross ton, depending on grade, says World Steel Dynamics analyst Peter F. Marcus, who calls the steel scrap price outlook "a wild card" for buyers at the mills who are seeking a slowdown in raw materials cost inflation.
A shortage of iron and steel scrap caused by expanded exports and rejuvenated purchasing at home has caused prices to increase 70% in a year. No. 1 busheling is priced currently at about $480-$500 per gross ton delivered to the steel plant, say some contacts, versus a brief low of about $125/gross ton in November 2008. Midwest shredded auto bundles are priced at $405-$420, versus a one-month low of $156 in April 2009. In March, busheling averaged $470 while shredded cost an average $385.
"Increases in steelmakers' raw material prices in 2010 are estimated to add about $150 per metric ton to steelmakers' costs to produce hot-rolled (sheet) even after assuming a rise in operating rates," Marcus writes to clients. Mini-mill steelmakers charge their electric-arc furnaces with mostly scrap and some scrap supplements such as direct-reduced iron or hot-briquette iron. Blast furnace-based steelmakers can use up to 20% scrap metal along with iron ore, and some can take 30% scrap.
UBS Investment Research says in a report that "marginally better" domestic demand, greater exports to Turkey and still tight supply "continue to weigh on the U.S. scrap market"-and has allowed steel mills to boost transaction prices for sheet steel by 30% since December. "If scrap prices continue to rise again in April, we would expect flat-rolled producers to follow with another (price) increase," the UBS report states.
However, "we don't see scrap prices continually climbing forever," says Murray McClean CEO of mini-mill firm Commercial Metals Co., who sees reductions in domestic scrap prices by mid-year.
Sourced from:www.purchasing.com
Tianjin Over World Non Coke Iron Making Technical Consultancy Co.,Ltd. All Rights Reserved
Tel.:+86-22-24410619 Fax:+86-22-24410619
TJ ICP 1100023 Email:info@driinfo.com