Less intense.

The export market remains in the driver's seat for ferrous scrap demand and pricing. Recyclers note that domestic mills are buying at levels necessary to feed their furnaces, but their demand is not what is fueling the high per-ton prices that have held through the summer and early fall.

The state-controlled Chinese economy continues to expand and add steelmaking capacity, sending out brokers hungry for ferrous scrap to North America. China's growing economy is the over-arching factor shaping the ferrous scrap market's demand and pricing sides, according to several observers.

In a presentation at the Institute of Scrap Recycling Industries Inc. (ISRI) Commodity Roundtables, Peter Marcus of World Steel Dynamics, Englewood Cliffs, N.J., presented his forecast through 2010, which shows a growing shortfall of ferrous scrap and other steelmaking feedstocks. The forecast is predicated on the continued blossoming of China's steelmaking capacity continuing throughout the decade.

As of mid-October, exporters continued to receive orders for Chinese destinations, and ferrous scrap pricing remained toward the higher end of its historic trading range.

Also at the September Ferrous Roundtable, in Rosemont, Ill., Tony Taccone of First River Consulting, Pittsburgh, looked more closely at the North American steel industry. A key issue affecting demand for domestic EAF operators, says Taccone, will be manufacturing sector vitality in the U.S.

Taccone noted that the U.S. economy's "steel intensity," measured by the amount of steel produced for each $1 billion of GDP, is trending down. For both steelmakers and scrap dealers, however, the export market could be the saving grace.

Meanwhile, North America's economy relies less intensely on steel, though demand for the metal will increase if the construction and highway segments begin to bounce back.

Speaker Frank Cozzi of Metal Management Inc., Chicago, advocated for steelmakers and scrap dealers and brokers to explore longer-term contract arrangements to foster relationships based on guaranteed shipments of quality product.

No. 1 Heavy Melt Composite Pricing

Sept02   $103.62
Oct      $103.12
Nov       $97.25
Dec       $97.00
Jan03    $106.41
Feb      $115.91
Mar      $120.42
April    $119.80
May      $109.04
June     $106.13
July     $111.21
Aug      $123.32
Sept     $128.35

Source: American Metal Market
(per gross ton, monthly average)

Note: Table made from bar graph.