AMM Midwest Scrap Index, No. 1 Busheling (blue circles): All prices are effective the 10th of the month or the following Monday if the 10th falls on the weekend. RMDAS Ferrous Scrap Price Index (black boxes): Per gross ton for No. 2 shredded scrap, defined as 0.17 percent or greater copper content, effective the 20th of each respective buy month.

Ferrous scrap prices rose again in January 2017, starting the new year the same way they spent the last two months of 2016—bouncing back from the steep drop that affected pricing in September and October of that year.

As measured by American Metal Market (AMM) pricing surveys and indices, the most common scrap grades rose from about $35 to $40 per ton in the early January buying period. These Midwest Index prices built on gains of roughly $25 per ton in November 2016 and $45 per ton in December.

Climbing less vigorously at the start of the year was export pricing, according to AMM’s surveys. The heavy melting steel (HMS) grades bought by overseas brokers and mill buyers in 2017 rose by less than $12 per ton on the West Coast and by about $18 per ton on the East Coast.

The obvious concern for ferrous scrap processors is bracing for a change in pricing momentum that often happens after three months of rising prices. One signal that this may be coming soon is the relative weakness in export prices and a perceived dwindling of export demand.

However, any drop in export demand on the ferrous side was not being matched on the nonferrous side in January, thanks to seasonal considerations.

According to one shredder operator in the western United States, already stiff competition for auto bodies and other shredder feedstock grew even tougher in early January in part because of increased orders for zorba, other mixed metals and insulated copper wire from China.

In that nation, many buyers were doubling up on scrap orders that will need to be made before their purchasing offices largely shut down for a week or more for the Lunar New Year (Chinese New Year) holiday, which in 2017 runs roughly from Jan. 27 to Feb. 2.

Shredding plant operators who wanted to help fill those orders were grateful that higher scale prices on the ferrous side were bringing in a little more scale traffic, but they also were running into vigorous competition for material.

The fundamentals of the ferrous market itself continue to have the greatest impact on supply, demand and pricing, with a number of questions surrounding the way the domestic and global steel industries will fare in 2017.

Although ferrous scrap recyclers know the market cannot go up forever, some of the news from the steel sector as the calendar page turned was more positive than negative.

Domestic steel output figures gathered by the Washington-based American Iron and Steel Institute (AISI) for the first week of 2017 demonstrated positive momentum for the U.S. steel industry.

Steel output in the U.S. in the week ending Jan. 7, 2017, was 1.68 million net tons at a mill capacity rate of 71 percent. That compares with output of 1.61 million tons in the first week of January in 2016—a 4.8 percent increase. In the first week of 2016, the mill capacity rate was a lower 68.7 percent.

In addition to the year-on-year increase in output, the most recent output figure also represented a 5.8 percent gain in production from the previous week, the one ending Dec. 31, 2016. The Christmas holiday likely was a factor during that week, when output was just 1.59 million tons and the capacity rate was a lower 67.1 percent.

Ferrous pricing largely has been in harmony with the stock market in terms of showing strength since the election of Donald Trump to the presidency. In the case of steel and ferrous scrap, trade policy and steel sector analysts alike may be counting on President Trump to take decisive action on Chinese steel exports.

As a campaigner, Donald Trump referred to China regularly as a nation with which the U.S. has an unfair trading relationship. The metals sector, including steel and aluminum producers, has been among the most consistent and loudest of voices claiming to be the on the receiving end of unfair practices.

In mid-January, before Trump had taken office, a top government official in Hebei Province, China, pledged to curtail nearly 32 million metric tons of steel and iron output in 2017 and to cut nearly 50 million metric tons of output by 2020.

Skeptics have reasons to doubt whether steel output in China genuinely will be reduced following such announcements, however.

Throughout much of this decade, China’s central government has acknowledged steel industry overcapacity and identified tonnage amounts to be targeted with cutbacks. Many of the state-owned steelmakers, however, are owned and managed by provinces that have no wish to lay off workers or relinquish their roles as cradles of the Chinese steel industry.

So far, despite central government proclamations, China’s annual steel output has remained in the 800-million-metric-tons-per-year range from 2013 to 2016. Whether a new U.S. president takes action to cut off Chinese steel export markets will be one of the intriguing story lines of 2017.

Additional RMDAS (Raw Material Data Aggregation Service) pricing from Pittsburgh-based Management Science Associates (MSA) is available on the Recycling Today website at www.RecyclingToday.com/RMDAS.

The American Metal Market (AMM) Midwest Ferrous Scrap Index is calculated based on transaction data received that are then tonnage-weighted and normalized to produce a final index value. The AMM Scrap Index includes material that will be delivered within 30 days to the mill. Spot business included after the 10th of the month will not be included. The AMM Ferrous Scrap Export Indices are calculated based on transaction data received that are then tonnage-weighted and normalized to produce a final index value. The detailed methodology is available at www.amm.com/pricing/methodology. *FOB New York, in metric tons; **FOB Los Angeles, in metric tons.