The one word to describe scrap metal markets is:
lack·lus·ter: ˈlakˌləstər/ adjective lacking in vitality, force, or conviction; uninspired or uninspiring.
Markets moved sideways for February with little excitement moving into March. Scrap yards throughout the country are anxious to find a home for their scrap at any price. Steel mills severely reduced their volume buys due to lack of demand. A mill in the Midwest purchased 30K tons vs. 130K normally; another mill bought 50K – which is half the typical buy.
Exports… Utilization rates in Turkey are less than 50%. The real drag is our friends in Asia – they’re celebrating the Lunar New Year of the Monkey, and expect the festivity to last up to 15 days! Nuts – can you imagine, a fifteen day holiday? No wonder they’re in a recession.
Future forecast – Did you read Crain’s Cleveland Business, they quote Andrew Lane with the investment research firm Morningstar Inc. “Expect steel prices to remain low, which he defines as below $500/ton, through the end of the decade.” Gee Whiz – 4 more years?
Our national trade group, ISRI (Institute of Scrap Recycling Industries) recently held a webinar to discuss falling prices. A panelist, Lisa Gordon, from AMM anticipates more downward pressure. Historically, scrap follows lockstep with both Oil and Iron Ore; and inversely correlated with the strength of the dollar (robust greenback = lower commodities). Both have more room to fall with the supply glut.
Take a look at this chart, the economic indicators are signaling a recession but the rest of the world doesn’t know it yet?!