Severe winter conditions are impacting large steel-scrap-generating regions, the main feedstock for electric-arc furnace mills in the US.
The cold weather and winter storms gripping areas of the country have been a bullish indicator for prices of ferrous scrap.
Cold weather hinders scrap peddlers from collecting scrap and bringing the material to processing yards.
Severe conditions also impact scrap processing and transportation equipment that scrap suppliers rely on to deliver material to steel mills.
STEEL SCRAP PRICES
January ferrous scrap prices were initially expected to increase $10-$20/long ton compared to December.
Once market participants returned from holiday breaks, the market quickly moved up $20-$30/lt and the weather was a major reason for the additional increase.
The Platts TSI Shredded Scrap price assessment gained another dollar Thursday to $334.75/lt, delivered to US Midwest steel mills.
The price is up 11.5% since December 4 when it was $300.25/lt.
STEEL SCRAP DEMAND
The expected weather-related logistic disruptions have some scrap suppliers hesitant on what they are willing to commit to sell in January, for fear of not finishing deliveries by the end of the month, making it even more difficult for steel mills to buy all the scrap they will need for January.
This is already inspiring confidence in scrap suppliers about February prospects for scrap demand.
In the week ended December 30, 2017, domestic raw steel production was 1.637 million short tons while the capability utilization rate was 70.2%, according to American Iron and Steel Institute data. About 65% of that output is from scrap-based mills.
DEEP FREEZE BOOSTS US METALLURGICAL COAL PRICES
After a sharp jump Wednesday, US metallurgical coal prices moved higher again Thursday as cold weather, frozen coal and port delays made loadings and collection through the chain difficult, delaying logistics in the Appalachians and at east coast ports.
Atlantic metallurgical coal markets reacted Thursday to force majeure declarations at US export terminals in Hampton Roads, which led to stronger spot prices.
MET COAL PRICES
S&P Global Platts assessed US high-vol A hard coking coal up $5 to $230/mt FOB US East Coast on Thursday -- after the price had surged $15 Wednesday to $225/mt FOB USEC.
Also on Thursday, US low-vol coal added $2 to $207/mt FOB USEC. The US high-vol B assessment increased $2 Thursday to $157/mt.
MET COAL DEMAND
Longer delays than a few days loading coals at Hampton Roads ports would likely mean even higher prices, market sources told Platts.
In Baltimore, the CNX terminal operations were described as slowed by the weather, but the loading of vessels continued.
"If it's delayed one day there will be no impact," a buyer said. "Coal prices are already too high, it remains to be seen to what extent they can go higher."
In the event of extended waiting time from the US, buyers may be spurred to bid up on additional tonnages and new positions from the US, Australia or further afield such as Colombia, a steel mill executive said.
Two suppliers talked up forward pricing for spot or other business in the first quarter.
FERROALLOYS
Barges loaded with ferroalloys are facing severe congestion getting up to Chicago because of ice on the upper Mississippi and Illinois Rivers/Chicago River.
