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 squares): 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.

After completing 2016—a year in which ferrous scrap prices went up in 7 of the 12 months and down in only five—scrap recyclers already have experienced a price swing in each direction in the first two months of 2017.

February domestic mill buying prices, according to American Metal Market (AMM) Midwest Index pricing surveys, showed a drop of more than $25 per ton in the value of No. 1 heavy melting steel (HMS) and $23 per ton for shredded scrap.

Adhering to a pattern that was more common in earlier decades, AMM’s No. 1 busheling grade of prompt scrap held on to its value more tightly, dropping by just $8 per ton in February.

After the February buying period, the spread in value between No. 1 busheling, at $305 per ton, was some $23 per ton greater than the price of shredded scrap and more than $45 per ton greater than the value of No. 1 HMS.

Scale prices that increased steadily (and sometimes sharply) between October 2016 and early February 2017 finally seem to have helped bring more obsolete scrap into feeder yards and shredder yards.

Jerry Miller of Minnesota-based Wm. Miller Scrap Iron & Metal Co. says low scale pricing in late 2015 through the first three quarters of 2016 “reduced the supply to even cover the low demand.” As of January 2017, Miller says, “Now demand seems ready to pick up some, and over-the-scale prices have increased, causing more activity and interest in selling scrap.”

While a few severe winter weather fronts hit the non-Sun Belt portions of the United States, including a blast of deep snow along the Eastern Seaboard in early February, enough scrap has apparently flowed into yards to make U.S. mill buyers comfortable that they can procure scrap from multiple sources.

A recycler in the South says mill buyers may be overconfident, though, and, while they did bid prices down in February, they had anticipated an even steeper price drop.

As indicated by AMM’s export indices, overseas buyers in early February bought scrap for less compared with January, with weak East Coast pricing being indicative of reduced interest from Turkish mills.

AMM also reports that one or more buyers from China came into the U.S. Pacific Coast market in early 2017 to buy ferrous scrap bulk cargoes. The activity helped AMM’s West Coast ferrous scrap index price drop by only $13 per ton in value compared with a sharper $48 per ton drop in the East Coast index price.

The first six weeks of 2017 have brought encouraging news on domestic steel output, according to figures gathered by the Washington-based American Iron and Steel Institute (AISI).

In the week ending Feb. 11, 2017, steel output in the U.S. was 1.74 million tons, produced at a mill capacity rate of 73.4 percent. That represents a 1.7 percent increase compared with the 1.71 million tons produced the week ending Feb. 11, 2016. The most recent weekly output also is up by 0.9 percent compared with the previous week.

Year to date through Feb. 11, 2017, some 10.3 million tons of steel have been produced in the U.S., a 5.1 percent increase compared with the first six weeks of 2016. The average mill capacity rate of 72.4 percent in 2017 is up from a 70.8 percent figure at the same time in 2016.

For several years, China has produced far more steel—by an order of 100 million tons or more—than it can consume domestically, an overcapacity situation that has suppressed prices globally, according to critics.

Much of China’s steel is made by state-owned enterprises (SOEs), and China’s central government and provincial governments in northern China have shown little willingness to shutter mills there and issue mass layoff notices.

Signs in February indicated that the battle against air pollution, which has widespread public support, finally could provide some political cover to reluctant government officials to make some meaningful capacity cuts.

Reuters reported in mid-February about a policy under consideration in China to more intensely scrutinize emissions at steel mills and aluminum production plants.

In that policy’s first draft, according to Reuters, China’s Ministry of Environmental Protection (MEP) has proposed measures that could slash steel capacity by some 50 percent and aluminum capacity by 30 percent in several different parts of China.

“Demand seems ready to pick up some, and over-the-scale prices have increased, causing more activity and interest in selling scrap.” – Jerry Miller, Wm. Miller Scrap Iron & Metal Co.

The northeast of China is a particular focus of the policy as it has been battling visibly high air pollution levels for several years. The document outlines plans to cut steel and fertilizer production capacity by at least half and aluminum production capacity by at least 30 percent in 28 cities across five regions in China.

The government scrutiny of metals production is being conducted in tandem with a widely reported public protest against a proposed aluminum plant in northern China.

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

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 *FOB New York, in metric tons; **FOB Los Angeles, in metric tons.