Scrap Metal Market: January 2019 Trade Talks Impact on Steel

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Trade talks the focus of 2019 as both steel and scrap values start the year down.

The scrap metal market report from Advanced Remarketing Services is a snapshot of the recent happenings in the scrap metal industry. Our report is specifically focused on the price of scrap steel from crushed autobodies. Each monthly report is a review of the market performance in the previous month.

The first report of 2019 relates to the end of the last year and shows a small decline in value to close out 2018. On average the percent change from the last month resulted in about a 1% decrease. The average price of crushed autobodies to start 2019 is just over $192/ton. Compared to the start of 2018 the market is starting out this year over 13% higher.

National Crushed Autobody Price Index January 2019 Update

All zones across the country fared relatively similarly. Each of the five zones saw a decrease between 0.5 – 1.5% compared to the previous month.

Lower demand is hurting steel prices as 2018 gains are being erased.

When steel tariffs fully went into effect last summer steel prices jumped immediately. In fact, they rose by more than 50% after the 25% steel tariff and 10% aluminum tariff were decided upon as a matter of national security. The industry benchmark in the U.S. is hot-rolled coil steel which according to S&P Global Platts in a recent NY Times article, “jumped 41% in the first half of 2018.”

The spike in U.S. steel prices has been a burden on industries that rely so heavily on metal, namely automakers and home-builders. While these industries have struggled to absorb higher steel prices they have significantly hurt demand for the commodity. The NY Times article continues on to report the price for hot-rolled coil steel, “fell about 21% from that peak (referring to the first half price jump) in the second half of the year.”

Struggling steel prices and lowered demand have been passed along to the scrap market as well. From around the industry the major concern being talked about that is hurting prices is there is nowhere overseas to sell scrap steel to. With China and Turkey not in the market, sellers are stockpiling the metal as values quickly fall.

In effort to move forward trade talks, U.S. debating lifting tariffs on China.

As the trade battle with China wages on the idea of lifting tariffs have been proposed. There is a March 1st deadline to resolve the dispute between the U.S. and China and relieving these tariffs could be what helps get it done. This proposal from Treasury Secretary Steve Mnuchin is still very much at the discussion stage but this story is being watched very closely. These talks with China will very much set the stage for steel and scrap markets for all of 2019.

NOTE: All figures are believed to be reliable and represent approximate pricing based on information obtained prior to publication. Data is sourced from American Recycler, London Metal Exchange, iScrap App, and Scrap Monster.  Advanced Remarketing Services is not responsible for the accuracy or completeness of the information provided, or for the use or application of information herein.

Zack LaskyScrap Metal Market: January 2019 Trade Talks Impact on Steel

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