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Largest drop in scrap steel prices since 2008 | 2015


February is the month we celebrate valentine’s day and acknowledge the ones we love….Well, no one told the U.S. Steel Mills about this tradition because scrap suppliers are being shunned instead of feeling their love. February 2015 has experienced the largest drop in scrap steel pricing since 2008. Our local market is down $80/Ton with the rest of the country seeing similar decreases of $80-$110, depending on the grade. There are many factors contributing to the current market conditions with the core factor being a large oversupply of available scrap. This oversupply is largely due to the strong US Dollar that is causing a ripple effect in the following key areas.

  1. Lack of Exported Scrap – Because of the dollar’s strength, exporters are finding cheaper scrap steel in other markets/countries. This absence of foreign buyers is flooding the US market with available scrap tonnage leaving it severely oversupplied. The mills are having their way with scrap prices and there isn’t a safety net in place to help catch or create a rebound. Couple this with cooling demand on new steel products and you have an overpriced market on both sides, new and scrap.
  2. Influx of Imported new steel – The stronger dollar entices other countries like China, Canada, and Mexico to sell their new steel products into the US for our currency and its favorable exchange rate. This influx of cheaper foreign steel is putting pressures on domestic mills to lower their sales prices and further encourages them to continue the negative buying and selling price trend.
  3. Cheaper Iron Ore/Pig Iron Prices – Iron ore has also become much cheaper with our stronger currency and the worldwide supply chain availability therefore becoming a popular scrap substitution and putting pressures on steel prices. US imports of Brazilian pig ion are up 39% from this same time last year .  These cheaper products are direct competitors to scrap grades and reduce their overall value consequently continuing the negative market sentiment.

Local scrap consumers are stating they believe the scrap steel markets were over-priced by about $100/Ton in the current environment. This is leading many of us believe that we are likely in for an additional drop of $20-$30 in March to close the gap. Ultimately, this weakened pattern will likely continue even after the market bottoms out unless we see the following 3 conditions improve within the next 30-60 days:

  1. The US dollar weakens attracting more exports from the US and lowers the imports of  iron ore and new steel products that are undercutting the domestic markets.
  2. Export buyers return to the US and purchase surplus tons equalizing the supply vs. demand and posing some competition for domestic consumers.
  3. Demand for new steel products grows higher than current levels and mills consume more scrap. In this scenario, we would also expect new steel prices to firm up and lead times to increase.


Like steel prices, nonferrous base metal prices are suffering from the strong dollar and lack of foreign interest. Starting with copper, prices surpassed a 5 year low and ended the month of January down 11.3% from December levels. Copper is especially susceptible to weaker Chinese factors and their exodus from the market has hurt copper prices. The Chinese New Year holiday and ongoing labor disputes causing major congestion in the  West Coast ports are also weighing down heavily on red metals.  Aluminum and Nickel, both traded on the London Metal Exchange, found some positive ground during the month of January. Aluminum prices rose about 2% and nickel prices saw a 3.7% increase on the European index, buoying up the scrap prices while many others fall around them.

Have a comment or prediction about the market? Share with us in the comments below.

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