Final Thoughts

Scrap trading has been slow to develop in all but the Detroit area mills. The domestic steel mills are trying to reduce the spread between shredded scrap and prime grades of scrap (busheling and bundles) which in some cases has expanded to $70 per gross ton. Scrap guru Michael Marley reported this afternoon that the domestic mills are trying to shave $30 per ton off the spread. However, prices did settle in Detroit where prime grades were down $10 per gross ton while there was no change in obsolete grades.

Scrap is important as steel buyers watch the changes and use them as a hint as to what direction steel prices should go. If the mills get reductions of $20 per gross ton or more, look for buyers to demand reductions in their base prices. A service center executive told us that one of his mill sources was positioning him for a sideways move on scrap in August. However, we were told if there is a reduction in scrap their company would be asking for relief.