Wednesday, May 07, 2008

Scrap prices in US likely to erupt

According to calculations posted by the American Metal Market, the May delivered price for scrap steel from auto stamping plants increased USD 135 per gross ton, bringing the revised price to USD 690. As market prices for heavy melting, busheling and shredded grades of scrap generally follow auto bundle trend within two weeks, prices for scrap are about to erupt.
In analysing the revised run up of USD 290 from USD 400 in March, analyst Ms Michelle Applebaum in Chicago told clients that “The substantial hike was a result of the limited availability of prime scrap due to the American Axle & Manufacturing strike, weaker manufacturing output especially automakers and high prices for scrap alternatives such as pig iron and HBI which are ore based and are selling for similar prices on an iron unit equivalent’ basis.”
Ms Applebaum added that there’s also a chance that some mills may be pre buying scrap since industrial output typically declines for summer vacation shutdowns and reduced auto bundle scrap supply.
Ms Applebaum is very bullish that the auto bundle numbers will be indicative of increased future prices for US market scrap and finished steel prices.

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