Ferrous scrap prices may take different paths in the coming months. Industrial steel scrap like No. 1 busheling could be on the high road, with its price climbing. But obsolete grades like heavy melt and shredded scrap could be left behind, or even lose some value. Steel sheet products, or lack of them, have become the driving force for finished steel markets. USS’s production problems at two of its mills–a furnace outage in Detroit, MI, and shortage of iron ore at Gary IN–provided mini mills that make steel sheet with an opportunity to step in and fill the void. That could boost demand for No. 1 busheling, which has been overhanging the market in some industrial regions. Unlike obsolete scrap, stronger demand won’t produce more busheling–its output is a function of manufacturing activity. Busheling comes to market regardless of the price. Thus, some flat-rolled mills may be outbidding each other for this grade, or reach into remote regions where more may be available. However, they often must pay higher prices to draw it away from local users and offset higher freight costs. None of these mills are likely to run short of scrap. Higher prices will encourage dealers to sell all they have on hand and what they expect to receive this month. Also, some mills are still owed scrap from last month because of the rail transport problems. That is easing now that warmer weather has arrived. Some dealers told us this week that they have finished shipping March orders and are now delivering scrap sold this month. Most mills also expect to see an adequate supply of the obsolete scrap now that winter has ended. New demolition projects often begin in the spring and those postponed by the cold weather resume operation. Collection of scrap by the smaller dealers and peddlers also rises as the weather warms. This year, some expect a huge increase because snowstorms and colder temperatures were more severe and sharply reduced scrap flows into dealers’ yards last winter. At the same time, the ferrous export market has not rebounded as much as anticipated. During the past decade, U.S. scrap exporters have been siphoning off about 20 million tons per year from the nation’s obsolete scrap pool. But that has declined by one third or more in the past two years. That could leave another 500,000 or 600,000 tons of heavy melt and shredded scrap looking for homes on U.S. shores. Combined with spring pickup in supply, this could help to drive down prices in May and June. Many industry members said their outlook for both steel and scrap demand into the third quarter and beyond remains uncertain at this time. Most expect the iron ore shortages to be resolved and the demand for prompt scrap to be lower, but June and July are also months when the automakers take vacations or shut down plants to retool for new models. That typically shrinks the flow of prompt scrap into the market. At the same time the pent-up supply of heavy melt and shredded scrap will have subsided. The spring thaw, if it generates as much scrap as some expect, will drive those prices lower and reduce those flows. Non-Ferrous Outlook Demand across various industries in the United States appears to be relatively strong, with the automotive sector leading the way. Export activity, however, especially into China, remains sluggish–which is not surprising given their recent slowdown. On the supply side, there doesn’t seem to be enough metal being generated to attract the right buyers. Consumer- generated scrap seems to be particularly hard to find, while industrial scrap is a little easier to source, but both remain tight. The US domestic P1020 premium is the cost over the London Metal Exchange (LME) price to purchase prime material in North America. It is important to producers because many use it as a tool in conjunction with the LME aluminum cash price when purchasing material from recyclers. The premium increased over 33 percent since the beginning of the New Year largely due to the LME warehouse queues, which have caused tight inventories. The premium reached a high of over $.20/lb. in the first quarter, but currently fell slightly from the high to $.18/lb. to $.1875/lb. at the beginning of the second quarter. Secondary aluminum ingot prices increased during the winter months, and have recently softened. On the other hand, various secondary scrap grades and ingots increased as much as $.05/lb. since the beginning of the year. One of the most commonly specified aluminum alloys, A380.1, is averaging $1.07/lb., which is down approximately $.0075 since mid-March. However, prices across the board are expected to soften with the spring weather as material becomes readily available after the harsh winter. Copper prices have decreased significantly since the start of the year. Most of this downward pressure has been the skepticism on the future growth of the Chinese economy. Chinese copper scrap demand remains weak, although brass and bronze seem to be a bit stronger. Even with the decrease in the copper price, the spot premium for Grade A copper cathode decreased just over $.01/lb. since the beginning of the year. Currently premiums are averaging $.0725/lb., and the non-ferrous team expects premiums to be unchanged in the next few months. Recently, premiums for copper scrap grades have dropped in combination with lower copper prices traded on the LME and COMEX. (The COMEX is the primary market for trading metals such as gold, silver, copper and aluminum.) While the overall copper price is lower, spreads have become tighter with lower availability of obsolete scrap. Consequently, supply constraints forced many scrap consumers to pay higher cathode premiums. Similar to the aluminum market, the harsh winter across the US caused a slowdown in scrap generation. With the warmer weather, supply constraints should ease, and spreads should widen. The cash price for zinc on the LME has been trading in a wide range since the beginning of the year, hitting a low in March, but rebounding by mid-April. The domestic special high grade zinc premium has slightly increased during the first quarter of the year. The price for spot material in North America has increased on average to $.0075/lb., with a range of $.095–$.11/lb. Contributors: MetalPrices.com’s market reporters For price assessments and charting, please visit our site, www.metalprices.com.