US ferrous scrap prices are likely to maintain current levels through January, after rising $10 Wednesday, according to comments from analysts and one scrap sector CEO.

 

After getting a $55/long ton bump in December, the Platts reference price for shredded scrap on Wednesday rose another $10/lt to a new midpoint of $250/lt delivered to Midwest mills.

 

In a report issued earlier this week, Longbow Research analyst Bob Richard expressed confidence that scrap prices would be able to hold their ground. "We believe, based on their [scrap contacts] comments, December's sequential domestic scrap price increase will maintain at least through January."

 

Though it might seem contradictory for scrap process to rise as finished steel markets remain dormant, Canaccord Adams analyst Eric Glover sees room for scrap price movement. "Our view is that scrap prices went down quite a bit more than steel prices did," said Glover. "So what we"re seeing now appears to be a return to more normalized spreads between scrap costs and steel prices. These are the types of spreads that steel companies are used to-I think they are going to be OK with it."

 

During a conference call to investors Thursday, Schnitzer Steel president and CEO Tamara Lundgren said the company had seen a rebound in scrap pricing and demand over the past few weeks. "We see strengthening in scrap prices right now," she told analysts and investors. "Overall, demand has picked up since [fiscal] Q1," the period ending November 30, 2008. -Platts