Molten hot steel is pouring - Industrial metallurgyWhat can we expect to see in the scrap markets in November and throughout 2014? Hopefully something positive! From September to October 2013, we experienced relatively flat markets. October’s trading started off mostly unchanged but ended with a slight uptick in obsolete grades from a late push for scrap. No. 1 Heavy Melt settled at $345 per gross ton in October compared to $342 per gross ton in Chicago’s September markets. However, No. 1 Bundles remained unchanged from September to October.

Several indicators are forecasting an increase in pricing for November as well as throughout most of 2014. According to an American Metal Market article, “Midwest ferrous scrap prices expected to increase up to $50 per gross ton over the course of the winter, with November likely to kick-start the push for higher prices.” Indicators pointing to a strong November and December scrap market include a tight scrap supply, a stronger demand from the mills, growth in the manufacturing sector and an increase in export prices. Several buyers agreed and anticipate a $10 to $20 per gross ton rise in prices in November, and a continued increase seen throughout the rest of 2013.

In 2014, U.S. scrap consumption will increase 7 percent, reaching 64 million tonnes according to the American Metal Market. The main reason for this forecast is based on a lesser need for crude steel to make new finished steel products. There are two types of processes used to produce steel according to www.steel.org, the Basic Oxygen Furnace (BOF) and the Electric Arc Furnace (EAF). EAFs use 100% recycled steel to produce new steel and make up 40% of today’s steelmaking processes in the U.S. This will help lead to an increase in demand for scrap metals.

“U.S. scrap consumption will increase at a faster pace than crude steel output next year due to a higher capacity utilization rates at scrap-intensive EF steel mills” (also know as EAF steel mills). Due to the fact that technology is improving in the steelmaking process, less and less crude steel is required to make new steel.

The American Metal Market recently released another article “US steel market outlook bright for 2014,” stating the World Steel Association released a short-range outlook for 2014 and has forecasted that steel use in the U.S. will increase to 99.8 million tonnes from an expected 96.9 million tonnes. Director-general, Edwin Basson said, “In steel terms, the United States is increasingly attractive to develop new steelmaking capacity, if you were so inclined to, because energy is cheap and it is a net importing market,” he said. “From that perspective, the U.S. today has very exciting opportunities into the future.”

We anticipate an increase in pricing for November’s Chicago scrap market. Lou Plucinski, President of B.L. Duke states, “After what has been a lackluster year for scrap prices, it’s exciting to finally have a silver lining going into 2014.”

For more information or any questions regarding scrap metal pricing, please contact us at B.L. Duke today.

different autumn leaves, multicolored background autumn theme

If you have been hoping that September’s scrap market would heat up like the recent weather trend in the Midwest, you are going to be disappointed.  At B.L. Duke we are expecting September’s pricing movement to be soft sideways.  When we forecast the market to be soft sideways we expect prices to remain relatively unchanged with the possibility of a few ferrous commodities contracting.

Let’s first take a look at the positive aspects affecting our industry.  In recent weeks it seems the the global economy has made a turn for the better.  Purchasing Managers Indices (PMI)  were released for the U.S., China and the Eurozone.  According to a www.globalpost.com article, the U.S. PMI increased to 53.9 and the Eurozone PMI increased to 51.7 which is a 26-month high.  Most important however is China.  The Chinese PMI hit a four-month high of 50.1, which suggests China’s economic slowdown is possibly coming to an end.  What makes this news so exciting is that PMI is not only a great indicator for the manufacturing sector but also the economy as a whole.  On the export side, an American Metal Market article confirmed that ferrous export prices have held while exporters wait for higher prices, “There is not much going on as West Coast suppliers try to push prices up by $10 to $15.  More demand is coming back and Japan exports aren’t widely available at the moment.”

Unfortunately, not all news has been good.  In the last couple of days two economic indicators have been released that throw up red flags.  On Monday, August 26th durable goods numbers were distributed.  A Wall Street Journal article stated, “A key gauge of business spending – non-defense capital goods orders, excluding aircraft – fell 3.3% in July after rising for five straight months.”  In the same article Cliff Waldman, senior economist for the Manufactures Alliance for Productivity and Innovation, made a great point.  “Such activity points to a defensive mentality on capital spending, doing only what is necessary to maintain the current level of growth but not operating with the type of aggressive entrepreneurial mentality that often underlies strong periods of U.S. economic performance.”  This morning we received a second dose of negative news.  The Thomson Reuters/University of Michigan‘s index of consumer sentiment fell from a six-year high of 85.1 in July to 82.1 in August.

Given the mixed economic news as of late it is B.L. Duke’s feeling that Chicago area scrap prices will remain somewhat flat.  It is my personal belief that the prime grades will remain unchanged, with the cut grades and shreddable prices retreating slightly.

cargo container ship in mediterranean coast

After what felt like an eternity of depressed scrap prices, July’s pricing increase was long overdue. As we plod through the dog days of summer, the industry’s attention turns to August. The question on everyone’s mind is will July’s momentum continue in August? It is our opinion at B.L. Duke that while we will not see the price increases realized in July, we do not anticipate a contraction. B.L. Duke’s President, Lou Plucinski, forecasts August’s scrap market movement as “strong sideways.”

July’s increase was driven by classic supply and demand factors at work in the domestic scrap market. August’s prices will be supported by factors outside of the United States. Even though domestic scrap metal demand may have slowed, the downward pressure will be alleviated by an active export market. According to an American Metal Market article China began to accelerate US scrap imports a few months ago, “Buyers gradually returned to the market in late May after international scrap prices had been falling for almost three months, market participants told AMM sister publication Steel First.” West coast exports have benefited from consumers turning away from Japan and favoring U.S. scrap to meet their needs. In the American Metal Market article West Coast ferrous scrap prices rally, they cannot determine why consumers have returned to U.S. markets but explain why they left originally. “In addition to the sales to China, one consumer in Korea opted not to engage in the Japanese scrap market and turned its attention to U.S. scrap, sources said. Korean demand for U.S. scrap plummeted over the past few months after a change in the value of the Japaneses yen made Japanese scrap far more viable.”

On the east coast, the United States’ largest scrap importer Turkey has not been left out of the action. “Although several mills in Turkey opted to book seven European cargoes this past week, three different mills reportedly fixed cargoes from a single U.S. exporter,” stated American Metal Market article, Export prices to Turkey jump $10 per tonne. If the U.S. dollar continues to weaken against the Euro we may see Turkey slow their purchases of European scrap in favor of U.S. imports.

Upon examination of the domestic and international scrap markets, B.L. Duke strongly believes that prices will remain flat. While we had hoped that prices would continue to rise we are pleased that July’s price increases will hold. For scrap metal pricing and additional market information please contact us at B.L. Duke.

red-white-blue-green

Be Red, White, Blue & GREEN this Fourth of July! Here are some ways we suggest being green this holiday:

  • Recycle plastic bottles, aluminum cans, & paper products
  • Use biodegradable plastic ware or reusable flatware
  • Use propane instead of charcoal when grilling to produce less greenhouse gases
  • Support local farmers

For more information on ways you can be green, please contact B.L. Duke today.

Business man with fingers crossed.Finally we are beginning to hear some good news for July’s Scrap Market!  Most everyone in the industry believed May to be the bottom of the market and we were wrong when June’s markets were sideways to down. In the last six months, we have only seen one increase in Chicago’s market. From February to March 2013, there was a $41 per gross ton increase for No. 1 Dealer Bundles. However, the scrap market has taken back March’s price gains in the last three months.

Over the last week we have seen several indications that prices will increase in July. The most predominant of these market indicators pointing to a price increase in July is export demand. The U.S. is starting to see more activity from Turkey in the last couple of weeks. According to an American Metal Market’s article from June 13, 2013 “Several U.S. exporters hope to see  small bounce in bulk ferrous scrap export prices, with sentiment boosted by a fresh round of Turkish purchases of European material.” Many U.S. exporters are said to be bullish on export prices to Turkey.

Shortly after, another American Metal Market article stated “East coast scrap prices lift on new Turkey sale”, reiterating again that due to Turkey’s demand for ferrous scrap, declining prices would hopefully come to an end. “The lone East Coast sale sent AMM’s weekly East Coast Ferrous Scrap Export Index a touch above previous levels Monday to $315.75 per tonne f.o.b. New York, up 0.6 percent from $313.84 a week earlier”. The small increase in prices seen last week could be the trend for the rest of July.

Export demand is not the only factor indicating a price rebound in July. According to the Scrap Price Bulletin’s Scrap Trends Outlook Vol. 4, No.6  there are 5 Key Indicators for July, “Export demand, Historical Factors, Mill Demand, Local Supply and Mill Production.” Due to these 5 trend indicators, especially export demand, we are hopeful that we will see an increase in July’s Scrap Market.

For more information on scrap metal pricing, please contact B.L. Duke today.

Chicago-Scrap-Metal-PricesWhile the U.S. steel and scrap metal market has seemed poised to move forward in recent months it has lacked the momentum needed to make any true gains. “The domestic outlook for steel: Is the glass half-empty or half-full,” asked Jim Tumulty of Seaport Group LLC in the American Metal Market article, Steel market set for status quo: Tumulty. In 2012, the U.S. economy stabilized sufficiently enough to remove fear of another major economic collapse from the market. However, companies with excess capital have been unwilling to invest due to mixed signals and unanswered questions out of Washington, coupled with recessionary concerns that continue to exist overseas. “I know corporations are just sitting on massive amounts of cash and they don’t know what to do with it,” says Tumulty.

This brings us to where we are today, February 2013. The Chicago scrap metal market has heard rumors of price increases in each of the last three months, only to have prices move sideways once orders were placed. According to Scrap Trends Outlook (Vol. 4 No. 1, Jan. 22, 2013), February’s forecast appears to be much of the same. The publication states, “Although order books are not as strong as hoped for a few months ago, they are strong enough to keep mills busy.” Until mills start realizing an increase in demand there is no reason to believe that scrap prices will see any real strength. Historical data does not bode well for February either. “Prices have not risen across the board since in February since 2007. They fell in four of the past five years and had mixed results in 2010, when primes rose and other grades fell,” states the Scrap Trend Outlook.

Given such information there is no reason to believe that prices will rise when scrap contracts are finalized in February. I believe the market in the coming month will be sideways with a chance that prices may fall slightly.

Steel Market Set For Status Quo: Tumulty

Scrap Trends Outlook

Food-Drive-for-The-Greater-Chicago-Food-DepositoryWhat are you doing to give back this holiday season? This year at B.L. Duke, we have decided to participate in a food drive to benefit the Greater Chicago Food Depository along with Cub Scout Pack #4439! We set up two locations to bring your donations to, our Corporate Headquarters and at our Ferrous Processing Yard. Throughout this past week, donations have been pouring in! On Saturday, B.L. Duke employees and members of the Cub Scout Pack #4439 will be volunteering at the Greater Chicago Food Depository. For more information on how to volunteer this holiday season, check out The Greater Chicago Food Depository’s volunteer page or if you are interested in making a food donation, please contact us at B.L. Duke. Happy Holidays from everyone at B.L. Duke!

Manufacturing-Expansion-Article-5Despite the still shaky economic recovery, there’s definitely some good news out there: American manufacturing is on a steady and consistent rebound according to the Institute of Supply Management (ISM), a not-for-profit research organization that compiles data to determine the rate of manufacturing output from month to month. Their conclusion? They show steady increases in both their manufacturing and employment indices.

Such healthy performance is an excellent indicator for the U.S. economy at large, but it has also come at the price of a paradigm shift in what it means to be a manufacturing worker in America.

The Globalization Factor

The advent of globalization means that GM is no longer just competing against Ford — Americans are competing against manufacturing workers abroad, whose lower hourly rates simply can’t be matched. With free trade agreements often bolstering the success of these foreign workforces, the only solution for the American brand of manufacturing has been to adapt.

The modern U.S. manufacturing job is no longer about working on the factory floor; instead, most U.S. jobs in production have transitioned to offices. Manufacturing positions requiring a college degree or trade skill are the strongest factor in keeping jobs here in the U.S., because educated workers can’t be so easily outsourced. By elevating the value of the average worker through education and training, U.S. manufacturing plants once again become the preferred place to do business in a world market, and American labor avoids the problem of competing with foreign workers altogether.

Embracing the Future of American Manufacturing

As with any big change, this notion is bound to be met with some resistance, and it will require action now on many levels in order to be successful in the future. Manufacturing companies and labor unions will need to work together to redefine the American workforce. Some important factors and changes will include:

  • Implementing advanced manufacturing techniques
  • Reducing material and overhead costs
  • Encouraging more well-trained employees

If the ISM is to be believed, a new boom era of American manufacturing is on the horizon — the question is simply whether or not we will continue to embrace the evolution of the industry. At B.L. Duke, we work on the cutting edge of the recycling, hauling, and demolition industry, employing the latest machinery and techniques to achieve the most sustainable, eco-friendly solutions for our clients. Contact us today for information about any of the