Scrap Metal Prices

The MEPS – North American All Products Average transaction price expanded by $US40 per tonne in February. Rises were noted in both flat and long categories this month on the back of escalating raw material costs. Adverse weather conditions put pressure on the supply of steel from some US producers. Buyers were wary of refilling warehouses as consumption remains low. The automotive sector was one of the few industries with strong activity levels. Despite a rise in the value of construction starts during January, sales were poor. Commercial building projects continued to be restrained by the inability of some developers to obtain credit. Nevertheless, there is now optimism that end-user demand may improve during the spring. Crude steel production continued to rise as mill sales volumes improved.

Our forecast is little changed from last month. The “all products” selling figure is expected to continue moving higher in the short term. Mill sales will, almost certainly, improve as service centres refill depleted inventories. End-user demand is likely to strengthen over the coming months as warmer weather arrives. Supply tightness could grow if imports remain low. Anticipated rises in raw material costs will also put upward pressure on transaction values during the second and third quarters. The MEPS – North American all products average price is, therefore, forecast to climb to almost $US800 per tonne during the summer.

Supply shortages are likely to ease later in the year as some US producers bring idled blast furnaces back on stream. High national debt levels will restrict public spending on infrastructure projects. Cautious buying activity will also limit mill sales growth in 2010. Consequently, price rises could falter during the third quarter. Downward pressure on selling figures is then expected towards the end of the year due to seasonally lower demand over the winter period. Source www.meps.co.uk