For a few dollars less.

October reflected another possible step in a backward pricing trend for ferrous scrap processors and traders, with many wondering whether the trend is seasonal, long-term or possibly a combination of the two.

National averages paid for three of the key grades tracked by the Raw Material Data Aggregation Service (RMDAS) of Management Science Associates Inc. (MSA), Pittsburgh, all demonstrated downward swings.

Mill prices paid for prompt industrial No. 1 busheling and bundles went down by $33 per ton in October, while shredded scrap (down $15 per ton) and No. 1 heavy melting scrap (HMS, down $9) declined less dramatically.

The declines were fairly even across all three geographic regions defined by the RMDAS service. Pricing fell slightly less in the South region, but that region's buyers continue to pay the lowest per-ton price for scrap in two of the three categories (prompt industrial and No. 1 HMS).

The October RMDAS price figures represented some of the lowest national averages since MSA began disclosing national monthly figures in November of 2005.

The only time mills have paid less than the $208 average paid per ton for No. 1 HMS in October was two months ago in August, when they paid $204.

For the No. 2 Shredded Scrap grade (for shred with above .17 copper content), which fetched $233 per ton in October, mills have paid less only in August of this year and in January of 2006.

And while scrap in the Prompt Industrial Composite category (No. 1 busheling and No. 1 bundles) retains the most value at $249 per ton, its current price is the lowest it has been since January 2006, according to RMDAS.

Processors and shippers of ferrous scrap were not blindsided by the lower prices, with several noting that there is often a seasonal slowdown, as mills keep inventories low as they head toward the holiday season.

In Midwest auto country, a combination of factors has processors wondering whether this season might entail a longer slump, however.

Most notably, American automakers are faced with poor sales and red ink. Ford Motor Co. has reported a $5.8 billion loss for the quarter ending Sept. 30, 2006. Most of that loss was assigned to one-time "restructuring" charges--which translated means the shutdown of entire factories and other operations within remaining plants.

Rob Bakotich of Detroit's Ferrous Processing & Trading Co. predicts the production of fewer vehicles and smaller vehicles will combine to mean that "flat roll steelmakers are going to suffer." (For more on the situation, see the Commodity Focus feature starting on p. 40 of this issue.)

Steelmakers in the United States by and large have been turning in favorable financial reports during the past two years, but an automotive slump combined with a housing market slowdown could test some of them.

Even while announcing a 77 percent jump in earnings for its most recent quarter, Nucor Corp., Charlotte, N.C., has warned of a fourth quarter that will be "impacted by lower shipments due to normal seasonal issues and to the current inventory de-stocking by our service center customers."

In particular, the company anticipates "lower spot prices" for sheet steel and steel bar stock in the coming quarter.

Ferrous scrap shippers can hope for more interest from export brokers in the remaining months of 2006, but the trend so far this year has been for muted demand from Chinese steelmakers compared to last year.

(Additional news about ferrous scrap, including breaking news and consuming industry reports, is available online at www.RecyclingToday.com.)

RELATED ARTICLE: MSA/RMDAS[TM] monthly ferrous scrap price index.

DECLINES MARK RMDAS PRICING

Steel mills were offering several dollars less per ton for ferrous scrap in October. National averages paid for prompt Industrial No. 1 busheling and bundles trended down by $33 per ton in October, while shredded scrap (down $15 per ton) and No. 1 heavy melting scrap (HMS, down $9) declined less dramatically.

Reported regional aggregated spot market prices per gross ton shown for each commodity are based on all Management Science Associates' (MSA) Raw Material Data Aggregation Service (RMDAS) participants' actual order data submitted to and processed by MSA as of the 20th of each respective "buy month," rounded to the whole integer. A map of RMDAS regions is available at http://rmdas.msa.com, as is a further explanation of RMDAS methodology and an accompanying disclaimer.

No. 2 Shredded Scrap is defined as containing. 17 percent or greater copper content. The Prompt Industrial Composite consists of an average of No. 1 bundles and No. 1 busheling. Additional pricing information on each grade can be found at www.RecyclingToday.com.

[c] 2006 Management Science Associates Inc. All rights reserved RMDAS is a trademark of Management Science Associates Inc.

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October 2006 RMDAS Ferrous Price Index

                                                           NORTH
                                        TOTAL U.S.      CENTRAL/EAST

Prompt Industrial Composite                $249             $251
#1 HMS                                     $208             $210
#2 Shredded Scrap                          $233             $234
#2 Shredded/Change vs. Month Before        -$15             -$16

                                       NORTH MIDWEST       SOUTH

Prompt Industrial Composite                $243             $239
#1 HMS                                     $209             $204
#2 Shredded Scrap                          $230             $233
#2 Shredded/Change vs. Month Before        -$15             -$12