The old saw about one part of the world sneezing and the rest of it catching a cold has proven true in terms of the economic impact of the COVID-19 pandemic. The coronavirus that locked down the People’s Republic of China in late January and all of February spread throughout Europe and the Americas in March and into April, bringing major public health and economic consequences.

The ripple effects of closed factories, auto showrooms and (in some places) scrap yards and ports quickly hit the steel industry in the United States. Despite a dwindling supply of ferrous scrap throughout the second half of March, a lack of appetite for scrap domestically—and from key export destinations—resulted in lower prices.

Surveyed pricing for the first 10 days of April published by Fastmarkets AMM points to declines in the $25-to-$50 range for commonly traded grades of scrap in the Midwest Index calculations.

The comprehensive impact of COVID-19 on the U.S. economy becomes evident when considering recyclers are reporting greatly reduced flows of scrap crossing their scales, yet steel output figures have kept up in a “race to the bottom” to ensure mill output does not lead to excess finished steel inventory.

By the third full week of March, recyclers in different parts of the U.S. were telling Recycling Today that flows into their facilities had dried up instantly and significantly.

Additional Raw Material Data Aggregation Service (RMDAS) pricing from Pittsburgh-based Management Science Associates (MSA) Inc. is available at

“Industrial flows have certainly dropped, I’d estimate by from 60 to 75 percent compared to the week before,” says a scrap buyer in the Great Lakes region in late March. “Many stamping plants that support the automotive industry have shut down, and manufacturing has slowed just as much,” he adds.

A scrap buyer in the Southeast is only slightly less bearish, saying, “Industrial output and demolition activities are off by at least 50 percent. Construction and demolition have virtually stopped, with the only ones operating being those involved in an essential capacity.”

Of his industrial accounts, he says that most tier-one and tier-two automotive suppliers have shut down, but most companies not involved in the auto sector are still running.

“Industrial flows have certainly dropped, I’d estimate by from 60 to 75 percent compared to the week before.” – a scrap processor based in the Great Lakes region in late March

A price drop occurred because most steelmakers took quick action to cut output in anticipation that the next several weeks would feature a largely locked-down America that would be buying and consuming far less steel.

According to figures collected by the Washington-based American Iron and Steel Institute (AISI), mill cutbacks began the week ending March 28, when crude steel output fell by 9.8 percent compared with the week before.

By that week, domestic raw steel production was 1.67 million net tons at a mill operating capacity rate of 71.6 percent. In addition to a nearly 10 percent week-on-week decline, the figure represented a 12.7 percent decrease from output in the comparable week in 2019.

That week started a pattern that stayed in place the following two weeks. In the week ending April 4, domestic raw steel production of 1.53 million net tons represented another 8.4 percent decline, according to AISI data. Figures released by AISI for the week ending April 11 showed a steeper drop yet, as the 1.26 million tons produced represented an 18.1 percent decline in output from the week before.

The steel mill output cuts in the three weeks combined totaled a plunge of more than 32 percent, and the mill capacity rate dropped from 79.4 percent at the start of the time frame to 56.1 percent at the conclusion of it.

For scrap processors, it represents a factor in the equation that has helped to offset their own dwindling supply. The other factor, for recyclers with the option of exporting to Turkey or India, is that those two nations are coping with their own reactions to COVID-19, providing little in the way of an alternative market.

The closest thing to a bright spot for the ferrous market was that some export sales did go through to Turkey, Bangladesh and Taiwan in late March and early April, according to Fastmarkets AMM. The activity was not enough to bolster the early April East Coast export price, which fell by nearly $40, but it did keep the West Coast price steady.

Ferrous scrap processors share a belief that mill buyers and other purchasers of ferrous scrap will have little choice but to raise their bids heading into the May buying period. Reduced scale prices in April will dry up the one source of supply—peddler scale traffic—that had held closest to steady in late March. That has led some processors to hold onto inventory.

Following the COVID-19 outbreak, some economic and investment analysts foresee a commodities “bullwhip” that will snap back, rising prices for steel and (probably first) ferrous scrap. (For more on anticipated ferrous market impacts, please see the story “A wild ride.”)