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Sonic echo: after a sustained boom, ferrous scrap prices finally slope downward.

For once, that first-quarter boom heard out in the recycling recycling, the process of recovering and reusing waste products—from household use, manufacturing, agriculture, and business—and thereby reducing their burden on the environment.  yard was not the sound of crashing prices. Rather, it was tile sound of ferrous ferrous (fĕr`əs), iron in the +2 valence state.

Containing or having to do with iron. The difference between ferrous and ferric is the number of valence electrons they contain (ferrous contains two and ferric contains three), which
 scrap going through the roof. However, a thud 1. thud - Yet another metasyntactic variable (see foo). It is reported that at CMU from the mid-1970s the canonical series of these was "foo", "bar", "thud", "blat".
2. thud - Rare term for the hash character, "#" (ASCII 35). See ASCII for other synonyms.
 appears to be echoing in the second quarter as tile market adjusts in a variety, of tempering factors.

Prices for shredded shred  
1. A long irregular strip that is cut or torn off.

2. A small amount; a particle: not a shred of evidence.

 material, in the $275-290 range in March, are likely headed down to $200 for summer. Most recyclers will find they still can do business at float price.

The run-up in prices brought sellers out of the woodwork woodwork: see carpentry; furniture; intarsia; marquetry; veneer; wood carving. . "They were lined tip on the street," says Ron Heggart, melt shop manager for Marion Steel Marion, Ohio Marion is a city in the U.S. state of Ohio and the county seat of Marion CountyGR6. The city is located in northern Ohio, approximately 50 miles (80 km) north of Columbus.

The population was 35,318 at the 2000 census.
. He buys scrap toe the mill. "There was lots of scrap coming to market. That's due to the high pricing," he continues.

IN AN OUT. "We're getting quite a little bit of material." says Lois Young, recycling supervisor for Skagit River The Skagit River (IPA: /ˈskædʒɨt/; loosely: "skaj-it") is a river in southwestern British Columbia in Canada and northwestern Washington in the United States, approximately 150 mi (240 km) long.  Steel and Recycling, Burlington, Wash. She says they have seen a lot of obsolete scrap that was buried on farms for years. "But we still are looking for Looking for

In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with.
 more," Young says.

"Our flow is not bad at all," says Dennis Bloch, Bloch Steel Industries, Seattle, Wash. "But our mill is not receiving at the rate we'd like it to be."

A southern mill buyer agrees that material is flowing and flowing fast. "We haven't had any problem getting scrap," he says. "The price ran up quickly last fall." He attributes the run-up to activity in China, Taiwan, Korea, India, Turkey and other countries, noting that their economies recovered before that of the U.S.

"Steel makers are running full-out," says Jon Spigel, vice president of trading for Tube City Inc., Conshohocken, Pa.

"With the price increase and the pretty mild winter we had in the Midwest, material flow picked up," says Raynard Brown, president of Galamba Metals Group, Kansas City Kansas City, two adjacent cities of the same name, one (1990 pop. 149,767), seat of Wyandotte co., NE Kansas (inc. 1859), the other (1990 pop. 435,146), Clay, Jackson, and Platte counties, NW Mo. (inc. 1850). , Mo.

RISING PRICES. Just about everyone on either side of the equation was amazed a·maze  
v. a·mazed, a·maz·ing, a·maz·es
1. To affect with great wonder; astonish. See Synonyms at surprise.

2. Obsolete To bewilder; perplex.

 by the price run-up in steel and steel scrap. Between June of 2003 and February of 2004, the price of hot-rolled coil steel skyrocketed 66 percent. Hot metal prices went from $320 to $600 per ton. Many in the market imposed surcharges of $1 to $1.50 per hundredweight hun·dred·weight  
n. pl. hundredweight or hun·dred·weights Abbr. cwt
1. A unit of weight in the U.S. Customary System equal to 100 pounds (45.36 kilograms).
 to cover the cost of scrap, energy and transportation.

Instead of the nice, gradual upward slope that economists like to draw--one reflecting the dance of supply and demand--the price of steel vaulted upward, changing a steady pattern of many months in a couple of leaps that would make a ballerina proud.

"This period has been one of the strangest market segments I can remember," says Marry Davis, Midland-Davis Corp., Moline, Ill. While Midland-Davis does not buy over die scale, it saw much higher scrap flow from its industrial customers.

"Every one of our industrial customers has been busier than they have been in some time," Davis says. "Material flow has been pushed by the general economy, not the recycling market."

He points to one particular customer from whom Midland-David used to pick up a roll-off box of turnings twice a week. Recently, the customer has been calling for daily pickups.

Just as that ballerina must collie collie, breed of large, agile working dog developed in Scotland during the 17th and 18th cent. It stands from 22 to 26 in. (55.9–66 cm) high at the shoulder and weighs from 50 to 75 lb (22.7–34 kg).  back to earth, nobody expected the market to stay aloft forever. The question that remains is whether the market will make a graceful grace·ful  
Showing grace of movement, form, or proportion: "Capoeira is a graceful ballet of power and control, artists kicking and jumping in synchronized movement" Alisa Valdes.
 touchdown or will stumble and crash.

Spigel notes that prices came down sharply in early April. "Prices got pushed up too high," he says. "Some grades were pushed to unreasonable levels. Export numbers are down, and that drives the market," he adds.

BACKWARDS POLITICS. In fact, it was exporting that drove the market in the first quarter and let it drop in the second, most observers contend. The jump in the price of steal came despite a political move that should actually have lowered the price of steel, according to according to
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

 classical economics.

At the end of 2003, President Bush ended the tariff on imported steal. Again, classical economics would say: more finished steel available, lower price. Two months later, the price of that hot-rolled coil zoomed north of $480 per ton.

In this case, it seems that the politicians plain got lucky. Classical economics did not go awry a·wry  
1. In a position that is turned or twisted toward one side; askew.

2. Away from the correct course; amiss. See Synonyms at amiss.
. Rather, two things intervened. First, the Chinese dragon's demand far steel continues to appear endless. With China buying new and recycled steel, there was plenty of extra demand to keep prices strong. Second, the U.S. dollar--under pressure of war expenses, rising oil costs and political uncertainties--continued to slip on world markets, blunting some of the impact of the flood of imports that otherwise would be expected.

"Tariffs had no effect whatsoever," says Heggart. He credits the firm prices to several factors. For one, it was a tough winter to collect scrap. For another, the export market demand from China, South Korea and Turkey was phenomenal.

"China was driving the increase," agrees Young. Skagit River ships most of its steel to a couple of local mills, not Asia. However, the Asian demand did have an impact on pricing.

But it was not all foreign influence that drove the prices up. Domestic sheet producers were active in the market, buying scrap to supplement their hot metal business. One observer says the domestic mills alone probably accounted for $40 of the price increase.

FORWARD THINKING. Davis notes that March was an odd month. Initially, no price list was put out for bundles. March 1 was a Monday, but there was little-to-no activity. Nobody seemed to know what to do.

March 4, a Thursday, things started popping. The market was up $20 to $25 per ton, and material was moving like mad. By 3 p.m., the flurry Flurry

A drastic volume increase in a specific security.
 of activity was over, and people saw prices ease.

March was, indeed, confusing. It turns out it was along work month--starting on a Monday and offering 23 working days. Most yards realized that February, as a 29-day month this year, offered an extra work day (a total of 20 days). However, some buyers underestimated the number of scrap-flow days in March--a whopping nine more days than in February. They ended up taking a hit on any leftover material.

"With the price as high as it was, a lot of people underestimated what they would rake in rake in

Informal to acquire (money) in large amounts

Verb 1. rake in - earn large sums of money; "Since she accepted the new position, she has been raking it in"
shovel in
," Davis says. "I know we did."

Heggart says he expects the run-up to be followed by a quick drop. "Prices are going down $30 per ton," he says. He bases that on two things: "We listen to the rumor RUMOR. A general public report of certain things, without any certainty as to their truth.
     2. In general, rumor cannot be received in evidence, but when the question is whether such rumor existed, and not its truth or falsehood, then evidence of it may be given.
 mill and look at our receipts."

A mill buyer from the South says he expects obsolete shredded contracts to see a $30 to $50 drop. Prime scrap, including bundles, is likely to fall $15 to $20, he expects.

"I can't imagine the exporters will chase the markets," Bloch says. And, in fact, April appears to finding the export market dropping.

On the one hand, Chinese planners, well aware of the situation, indicated that they would hold back on granting more permits and financing for increased steel output. However, they are building a plant near Brazil's mines to produce finished steel. And, they have announced plans to build several completely new cities, each to house as many as a million people in the coming decade.

TALLY UP. Given the high prices of scrap and the cost of shipping, everyone agrees that the prices of scrap will pull back.

The first indicators of a change in April pricing came in the second half of March. At that time, some mills announced they would not extend March contracts to April pricing. That typically happens when the mills anticipate an adjustment of at least $5 per ton. While not everyone predicts as severe a drop as Heggart does, they all agree with his general scenario and expect that prices will fall quite a bit more than the minimum amounts.

"My best guess is $20 to $25," Young says. She notes that in this market atmosphere of "instant revelation" of every market move, there are few surprises and everyone gets the same information at about the same time.

Scrap buyers feel that scrap dealers scrap dealer nchatarrero/a

scrap dealer nmarchand m de ferraille

scrap dealer scrap n
 made a lot of money as the steal market went up, and they warn that dealers are likely to be in a lot of pain during the next three months as markets go down. Several projected a 60- to 90-day period of eroding prices.

"When you say the prices are going down $30 per ton, it sounds like a lot, but that is what they went up in February," Davis notes. He notes that price drops usually are steeper than increases. "I would not have been shocked by a $40-per-ton drop," he says. "But that only takes it back to February levels or a little below."

Davis says it is too early to tell what the market will do as summer approaches. "I won't be surprised if it continues to drop," he says. Like many other observers, he defers any decision until the market can get a better reading on the Chinese market's appetite for scrap.

"My guess is scrap will be in the $180 to $225 range this summer," Bloch says. "I think that range is sustainable. The Chinese cannot be out of the market forever."

Spigel notes that shredded was off by $50 per ton and other materials were off by $30 to $35 per ton ... and that was just in April.

Looking down the road, he says he feels a sustainable price for shredded grades in the Mid-Atlantic that were close to $290 per ton will settle around $200 per ton. Heavy melt, which saw prices in the $230 to $240 level in March, will likely settle around $180.

Brown followed the consensus that prices would fall into May. Beyond that, he is not sure. "I think the $200 range for scrap may be a livable liv·a·ble also live·a·ble  
1. Suitable to live in; habitable: a livable dwelling.

2. Possible to bear; endurable: livable trials and tribulations.
 level," he concludes.

SIMS SIMS Secondary Ion Mass Spectrometry
SIMS School of Information Management and Systems
SIMS Sun Internet Mail Server
SIMS Student Information Management System
SIMS Steacie Institute for Molecular Sciences (National Research Council, Canada) 

Sims Group Ltd. has acquired the business and assets of Bay Bridge Enterprises LLO LLO Low Lunar Orbit
LLO Large Lakes Observatory (Duluth, Minnesota)
LLO Lipid-Linked Oligosaccharide
LLO Laser Local Oscillator
LLO Legislative Liaison Office
LLO Legislative Liaison Officer (US Army) 
, a Virginia-based recycling operation. The transaction is expected to be complete by the end of May.

Bay Bridge Enterprises operates a metals recycling and shredding shred  
1. A long irregular strip that is cut or torn off.

2. A small amount; a particle: not a shred of evidence.

 facility on 65 acres with a deep-water dock facility near the Atlantic coast on the Elizabeth River in Chesapeake, Va.

Jeremy Sutcliffe, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board.  of Sims Group, notes, "The acquisition is part of the Group's overall strategy to expand its business on the U.S. East Coast and complements our existing operations in Richmond and Tabb, Va."

ISG ISG Iraq Study Group
ISG Iraq Survey Group
ISG International Steel Group
ISG Integrated Security Gateway
ISG Information Systems Group
ISG Information Systems Group (IBM)
ISG Integrated Starter/Generator

International Steel Group Inc. has announced that its bid to purchase substantially all of Weirton Steel Corp.'s assets has been approved by Weirton Steel Corp.'s Board of Directors.

A hearing was scheduled for April in Wheeling, W.Va., to obtain final approval of the sale from the U.S. Bankruptcy Court bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. . The addition of Weirton is expected to increase ISG's annual steelmaking capacity by approximately 3 million tons.

RELATED ARTICLE: Shipping strains.

In order to ship scrap, one needs an affordable and seaworthy sea·wor·thy  
adj. sea·wor·thi·er, sea·wor·thi·est
Fit to traverse the seas: a seaworthy freighter; a seaworthy crew.
 vessel, a rail car or a truck. "Export slowed since the price of ocean freight has tripled in price," says Ron Heggart of Marion Steel, Marion, Ohio. "Ocean vessels are not as readily available."

The price of shipping off the West coast was up to $50 per ton--at least double the normal rate.

The increasing number of dealers in the Northeast who began selling into the domestic market in the first few months of 2004 reflected the price increase on shipping.

Just as on any open market, the tramp steamers and regular haulers saw demand tighten, so they ratcheted prices upwards. Domestic rail users saw somewhat higher prices, but nothing to match ocean freight rates Noun 1. freight rate - the charge for transporting something by common carrier; "we pay the freight"; "the freight rate is usually cheaper"
freightage, freight

Some observers blamed higher fuel prices for the run-up in ocean shipping costs. However,it was not so much because of the increase in fuel prices as it was a lack of available vessels for shipping. Not only did scrap steel markets push demand but there was sizable siz·a·ble also size·a·ble  
Of considerable size; fairly large.

siza·ble·ness n.
 demand for vessels throughout the Asia-Pacific region.

In light of the aging infrastructure at its ports, many Chinese shipments were taking weeks--not hours or days--to unload To remove a program from memory or take a tape or disk out of its drive. . This further exacerbated the vessel shortage. At $6,000 per day to have a ship sit idle, the situation just worsened.

A similar scenario played out on the rails. "Outbound, it's bean sporadic sporadic /spo·rad·ic/ (spo-rad´ic) occurring singly; widely scattered; not epidemic or endemic.

spo·rad·ic or spo·rad·i·cal
1. Occurring at irregular intervals.

," says Raynard Brown of Galamba Metals Group, Kansas City, Mo. "Everyone is trying to ship 10, 15, 20 percent more material, and that has put pressure on the gondola supply." All of Galamba's ferrous markets are domestic and they reach them by rail.

Several factors added up to produce a crunch: More material was available, more scrap was being shipped, and the material was moving longer distances. That stretched the supply of trains to the breaking point.

Brown says that their freight brokers tell them that the railroads are trying to do all they can do to provide service. Even in the best of times, gondolas can be in short supply.

As with the ocean-going shipments, the price has increased. "I'd gladly pay for it if I could get the service." Brown says.

The Philadelphia and mid-Atlantic area was an anomaly--it was one of the few places where one could find rail cars. "Most parts of the country are seeing acute rail car shortages," notes Jon Spigel of Tube City Inc., Conshohocken, Pa.

RELATED ARTICLE: What goes up ...

Scrap steel prices (and new steel too) have been on a non-stop elevator ride to floors that none of us ever thought were in the building. Those of us in the scrap trade were ecstatic ec·stat·ic  
1. Marked by or expressing ecstasy.

2. Being in a state of ecstasy; joyful or enraptured.

[French extatique, from Greek ekstatikos, from
 when prices doubled to levels that we were absolutely dying with. When those levels tripled, fear tempered our good spirits as customers found it difficult to get the material they needed for production.

Available scrap came at prices that quickly buried the extra cash you got for your scrap. As prices continued to climb, sewer grates, chain-link fences and every piece of steel that wasn't nailed down was getting stolen right off the street. Everybody wanted to know when it would end. The answer is, now!

While too early in the month (at this writing) to know how far scrap has dropped for April, the smart money is predicting $30 to $60 per ton off the record March prices. Most of us see additional hefty cuts coming for May and June as well.

I, for one, am glad it's over. We have many scrap boxes in unsecured areas. These boxes are normally emptied every two weeks. However, they have not been serviced in five months because somebody else does it every night.

Unscrupulous scrap dealers who are ordinarily shy about coming out during the daylight hours have found it easy to quote higher prices into a rising market that eventually enables their quote to become legitimate. All in all, this has been a tough, exhausting run, and seeing the market heading downward is pretty comforting to a tired scrap guy.

I guess the biggest question customers have is, "When will the price of the new steel go down too?"

Little birds are telling us that the nasty surcharges will end within weeks, and the price will begin to fall in 45 to 60 days. The most important thing to keep in mind is that even though the market is falling now, it is still sky high, relatively speaking.

--Marty Forman, president of Forman Metal Co., Milwaukee

The author is a Recycling Today contributing editor A contributing editor is a magazine job title that varies in responsibilities. Most often, a contributing editor is a freelancer who has proven ability and readership draw.  based in Cleveland. He can be contacted at curt curt  
adj. curt·er, curt·est
1. Rudely brief or abrupt, as in speech or manner. See Synonyms at gruff.

2. Using few words; terse.

3. Having been shortened.
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Title Annotation:Commodity Focus
Comment:Sonic echo: after a sustained boom, ferrous scrap prices finally slope downward.(Commodity Focus)
Author:Harler, Curt
Publication:Recycling Today
Geographic Code:1USA
Date:May 1, 2004
Previous Article:Hagglunds launches new valve program.
Next Article:Trading places: while some of Canada's scrap consumers struggle, recyclers shift to serving export markets.

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