Shipping out. (Ferrous).

Export markets continue to grab the attention of ferrous scrap dealers. Demand from China in particular has been credited with providing strength to the ferrous markets, although mills at other overseas destinations are also part of the mix.

Dealers throughout North America are benefiting from the phenomenon, with the strengthening demand having been in place long enough now to lift prices virtually everywhere.

Both dealers and generators who played the speculation game during the downtrodden past couple of years may be glad they did, as they have hastened to process and ship out their stockpiles. "We built up inventories when the markets were bad," says one dealer. "As the price [increase] arrived, we made the move to boost production to process and ship out 60,000 tons of unprepared scrap," says one such dealer.

A rugged winter in the eastern U.S. has provided yet one more market factor to keep prices high, as some collection and processing activity has been hampered by snow and bitter cold in the North and ice storms in the South.

For those who both have the scrap and the ability to help exporters put together a shipment, 2003 is starting off with the same positive conditions that characterized the second half of 2002. The dealer who stockpiled ferrous scrap notes that the boosted prices paid by exporters in the second half of 2002 allowed his company to have its "second best year" in the history of the company in terms of profitability.

Even shippers who ordinarily favor working with domestic mills are finding it hard to resist the siren song of high-priced export shippers. "I want to support U.S. industry, or we as an industry are harmed in the long run; if [the price] is within a buck or two, it goes domestic," says one dealer, "But when export prices are so much higher, I've got to do what's best for my business."

No. 1 Heavy Melt Composite Pricing

(per gross ton, monthly average)

Jan 02    $69.97
Feb       $76.58
Mar       $82.09
Apr       $92.03
May      $101.53
June     $101.60
July     $101.67
Aug      $101.67
Sept     $103.62
Oct      $103.12
Nov       $97.25
Dec       $97.00
Jan 03   $106.41

Source: American Metal Market

Note: Table made from bar graph.