August 2022 Scrap Market Under Pressure

Falling pig iron and finished steel prices, cool export demand, traditional summer slowdown and the Illinois River closer added downward pressure to August ferrous scrap market.  Prices dropped $20 – $70 per gross ton in August.  Prime grades are off 50% since their peak in April and are now worth less than shredded auto scrap.

Despite reports of secondary scrap flows easing in the wake of recent price drops, cut grades and steel turnings dropped $20 – $30 per gross ton.  August marks the first month since October 2019 that Fastmarkets’ assessment of Machine Shop Turnings is priced less than $100 per gross ton.

August’s non-ferrous markets differ by commodity. Stainless steel mills point to the recession for weak orders and the decline in prices.  Demand for stainless scrap is forecasted to remain weak with declining prices through the end of 2022.  Fastmarkets’ assessment of 304 solids and clips, broker buying price dropped 30% throughout the month of July.  Conversely, the copper market has traded up in recent weeks due to news of a potential $200 billion Chinese infrastructure package.  Aluminum scrap appears to have hit the bottom and is showing signs of stability.

The Illinois River closure added additional challenges to Chicago’s scrap market this month.  The Army Corps of Engineers will close the Brandon Road Lock and Dam from August 15th to September 4th.  This closure cuts off the only navigable waterway between Chicago and the Mississippi.  The Chicago area produces more scrap than is consumed by local mills so without viable truck and rail options, an oversupply is almost inevitable.  The Army Corps of Engineers has also scheduled 120 day closure between June 1st and September 30th of 2023.

“If I were a betting man, I’d say we’re bouncing on the bottom,” states Lou Plucinski, President.  “The futures markets are up for Q4 and there are three new EAFs that will spark later this year which will add more than 300k tons of new FE consumption on the river system.”

The addition of three new Electric Arc Furnaces (EAFs) is giving scrap dealers some hope for the forth quarter.  EAFs utilize 90% scrap metal or scrap substitutes in their mix and the new EAFs will add 2.6 M short tons of capacity per year.  New EAFs include Nucor – Gallatin in Ghent, KY, Nucor – Greenfield in Brandenburg, KY and the expansion of North Star Blue Scope existing EAF sheet mill in Delta, Ohio.


Do you plan on attending any upcoming events? Let’s schedule a meet-up.  Here’s where you’ll find the BL Duke Team, Upcoming Events 2022.