Major grades gain between $120 and $180 per ton in value and reach levels not seen since the “super cycle” peak of mid-2008.

Ferrous scrap prices soared in the March trading period, reaching heights not seen since the peak of the commodities “super cycle” of 2007 and the first half of 2008.

Figures compiled by the Raw Material Data Aggregation Service (RMDAS) of Management Science Associates Inc. (MSA) between Feb. 21 and March 20 reflect the impact of commodities sector turmoil caused by Russia’s invasion of Ukraine Feb. 24.

The national average of prompt ferrous scrap, as gauged by transactions known to Pittsburgh-based MSA, checked in at $703 per ton. That $181 per ton increase represents a 34.7 percent leap from the $522 average in the Jan. 21 to Feb. 20 trading period.

Prices for obsolete grades also rose significantly, though at slightly smaller percentages. Shredded scrap went from $475 to $599 per ton, marking a 26.1 percent increase for the grade. No. 1 heavy melting steel, similarly, rose 29.4 percent by moving from $421 per ton in the February buying period to $545 per ton in March.

The volatility in nonferrous and ferrous scrap markets is tied to Russia’s invasion of Ukraine and subsequent sanctions, which continue to create direct effects and side effects still rippling into new parts of the global pond in mid-March.

The scaling back of steel production in Ukraine occurred swiftly. On March 3, ArcelorMittal confirmed it had “taken the decision to idle its steelmaking operations in Kryvyi Rih, Ukraine.” Most other metals production in that nation also has been scaled back or come to a halt, according to media reports.

Soon thereafter, the curtailment of natural gas shipments to Western Europe led to mill cutbacks. AP has reported that Italy’s Acciaierie Venete shut three of its steel mills when energy prices “spiked to 10 times above normal.” The news service quotes an executive with the firm as saying, “Never, ever has this happened that we had to shut down ovens.”

The Russian attack on Ukraine and the growing consensus that China’s steel-intensive apartment tower construction boom has met an abrupt braking process likely has steel producers and scrap processors in the U.S. glad to be part of an industry with at least some measure of self-containment. 

On the domestic front, in the week ending March 5, 1.76 million net tons of steel were produced in the U.S., according to AISI, with a mill capability utilization rate (capacity rate) at exactly 80 percent. The tonnage figure is up 0.4 percent from the previous week ending Feb. 26, when production was 1.75 million net tons, and the capacity rate was 79.7 percent.

The following week (ending March 12), production at U.S. mills did decline by 1.4 percent compared with the prior week—not a figure to be expected when scrap prices are increasing from 25 to 35 percent.

Overall, U.S. steel output looks similar to what was happening in the steel industry in America one year ago. Production was 1.76 million net tons in the week ending March 5, 2021, while the mill capacity rate at that time was 77.7 percent. The current week's production represents a 0.1 percent increase from the same period one year ago.

However, the domestic market cannot be separated from the scramble by steel mills in Turkey, Europe and Asia to source U.S. scrap.

Year-end data from the U.S. Census Bureau show that some 17.9 million metric tons of ferrous scrap were exported in 2021. Thus, events overseas remain vitally important to processors in terms of trading patterns and pricing.

Copper and aluminum pricing has been volatile following Russia's invasion of Ukraine, but not on par with the volatility seen in nickel.

Russia’s invasion of Ukraine Feb. 24 has led to volatility in the nonferrous markets, particularly for nickel. The London Metal Exchange suspended trading of the metal from March 8 through March 15, with LME CEO Matthew Chamberlain citing “further unprecedented overnight increases in the three-month nickel price” for the decision.

Nickel rose from $48,078 per metric ton March 7 to more than $100,000 per metric ton March 8 because Chinese company Tsingsang Group moved to reduce its short position of nearly 100,000 metric tons of the metal over a few hours, according to Davis Index, which cites suggestions in media reports.

March 15, when the LME announced that its nickel contracts would resume trading at 8 a.m. London time March 16, it also said it would be applying daily upper and lower price limits of 8 percent, which it increased to 12 percent March 17, to those contracts as well as to “all outright contracts in all base metals.” It also deferred delivery to March 23 for all nickel contracts entered into before March 16.

For other based metals contracts, which included aluminum and copper, the LME established a 15 percent upper and lower daily limit.

Copper and aluminum also reached new highs during LME trading March 8. According to Agence France-Presse (AFP), aluminum reached $4,026 per metric ton ($1.83 per pound), which marked “the first time the lightweight metal had breached $4,000.” AFP says copper also hit a new record, reaching $10,845 per metric ton ($4.92 per pound).

In the U.S. copper scrap sector, Brian Shine, CEO of Manitoba Corp., Lancaster, New York, says, “It is interesting because in some respects, nothing is going on, and, in other respects, a lot is going on.”

The wild fluctuations in the market are not producing the types of responses they normally would, he adds. “Shockingly, when we see the big market increases, we are not being offered a lot of metal,” Shine says. “That is normally what happens.” Consuming customers also are not calling for more metal when the price recedes. “We are not seeing those market-driven responses in supply and demand,” he says. “When people need metal, they call you regardless of whether the market is up or down.”

Historically, Shine says, a movement of a penny or two up or down would compel scrap sellers and buyers to action. But, for the last six to eight months, he says, movements of 10 cents aren’t spurring action. Instead, Shine says he believes consumers are reacting to their book of business, while yards are moving their loads once they are built for cash flow and market-related reasons.

Despite the current uncertainty introduced by the war in Ukraine, Shine says sentiment in the copper market remains bullish given the infrastructure investments and new opportunities created by increased production of electric vehicles and the transition to green energy. Additionally, he says the situation is adding momentum to a trend that emerged earlier in the pandemic of reshoring manufacturing activity.  “Some of our customers or our customers’ customers have seen improved orders in North America because they cannot get metal out of Russia.”

Presently, however, Shine says scrap generation still has not returned to pre-COVID levels, and scrap processors are seeing transportation and personnel costs increase, which are affecting margins.

Chad Kripke, president of the Toledo, Ohio-based brokerage firm Kripke Enterprises Inc., says aluminum is in tight supply, with a deficit having been projected in LME stocks for the year. It could get tighter if smelters in Europe must curtail production because of energy-related issues, which have been made even more pronounced by sanctions on Russian oil and natural gas. “There is a legitimacy for prices to remain at this level or higher, especially as smelters’ capacity constraints continue.”

Kripke adds, “The extreme volatility in the traded price of primary aluminum has led to a wide range of prices for items that track with the LME. Prices and spreads for the same items are all over the board as buyers try to reestablish proper values for these grades of scrap.” 

Steelmaker’s CEO cites strong demand, including backlog at Big River Steel.

Pittsburgh-based United States Steel Corp. has issued first quarter 2022 guidance projecting adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately $1.3 billion. U.S. Steel calls that “a new all-time record for the first quarter.”

“We expect to deliver another strong quarter of safety, adjusted EBITDA, free cash flow and operational performance in the first quarter,” says David B. Burritt, the company’s president and CEO. “At the beginning of the year, we communicated expected market softness for the first quarter, along with the normal seasonal impacts related to our mining operations. We are exiting the first quarter with spot business accelerating, steel prices rising, and the longest backlog at our Big River Steel operations since October.”

In addition to the strong performance of the scrap-fed electric arc furnace (EAF) Big River Steel business unit, U.S. Steel’s sales and profitability could be abetted by the impacts of Russia’s attack on Ukraine and subsequent economic sanctions.

Burritt says, “As a result of continued execution of our differentiated commercial strategy, we are realizing significant upside on our fixed-price contracts. We expect improving market conditions to continue into the second quarter as seasonal demand picks up and buyers begin to shift their attention to a more reliable, regional steel supply given the geopolitical risks and cost volatility which has increased in recent weeks.”

He adds, “The conflict in Ukraine is a human tragedy. Safety remains our number one priority. Our employees in Slovakia remain safe and we are demonstrating our culture of caring by assisting our Ukrainian neighbors through various charitable activities. The workforce in Slovakia has been quick to address refugee needs by supplying over 7,840 meals for refugees in Slovakia, working with Ukrainian suppliers to send 17 tons of food to Ukraine, and providing 800 beds for refugees arriving in Kosice [the site of U.S. Steel’s mill in Slovakia].”

Burritt concludes, “We are actively monitoring the conflict in Ukraine for impacts and risks to our people and business. Today’s market dynamics reinforce what makes U. S. Steel’s business model unique. Our low-cost, captive iron ore assets in Minnesota are a sustainable competitive advantage that cannot be replicated by the competition. We are increasingly translating this competitive advantage to our growing fleet of electric arc furnaces. We are building a pig iron machine at Gary Works to supply Big River Steel with up to 50 percent of its ore-based metallics needs by the first half of 2023 and will continue to identify additional opportunities to broaden our metallics strategy. These actions build upon the regionally sourced, low-cost iron ore advantage our U.S. blast furnaces have and the strategy in place with Big River Steel to supplement a portion of their prime scrap needs with home scrap from our integrated operations. We remain bullish for 2022 and another strong year of financial performance.”

The company says “recent geopolitical events are increasing spot steel demand, particularly at our Big River Steel operations, resulting in a growing backlog of orders. Considering the conflict in Ukraine and its impact on the global metallics supply, our raw material inventories remain well-positioned to continue meeting customer demand and contingency plans are in place to ensure raw materials are available from alternate sources.”

According to the company’s earnings guidance, while profitability will be “historically strong,” it will be “significantly lower” than in Q4 2021.

Steel Dynamics Inc., the electric arc furnace steelmaker based in Fort Wayne, Indiana, has provided first-quarter 2022 earnings guidance in the range of $5.55 to $5.59 per diluted share. Excluding the impact from costs associated with the startup of the company’s Sinton, Texas, steel mill of an estimated $83 million, or 30 cents per diluted share, SDI says it expects first-quarter 2022 adjusted earnings to be in the range of $5.85 to $5.89 per diluted share.

These figures compare with sequential fourth-quarter 2021 earnings of $5.49 per diluted share and adjusted earnings of $5.78 per diluted share, excluding additional performance-based companywide special compensation of approximately 8 cents per diluted share, a contribution to the company’s charitable foundation of 4 cents per diluted share and costs of 18 cents per diluted share (net of capitalized interest) associated with construction and startup of the company’s Texas mill. Prior year first-quarter earnings were $2.03 per diluted share and adjusted earnings were $2.10 per diluted share, excluding costs of 7 cents per diluted share associated with construction of SDI’s Texas steel mill.

SDI says it is expecting first-quarter 2022 profitability from its steel operations to be “historically strong” though “significantly lower” than its fourth-quarter 2021 record results in light of lower earnings from its flat-roll steel operations resulting from an expected decline of more than 10 percent in average flat-roll pricing, which it says will more than offset anticipated higher shipments and lower average scrap prices. Flat-roll steel prices have firmed with extending lead-times and expectations for further improvements based on higher input costs and global flat-roll steel supply disruptions, coupled with a continuing strong demand environment, the company says, adding that the automotive, construction and industrial sectors continue to lead steel demand.

SDI says its first-quarter 2022 earnings from its metals recycling operations are expected to be aligned with sequential fourth-quarter results based on improved metal margins offsetting modestly lower volume.

The company says it expects first-quarter 2022 earnings from its steel fabrication operations to almost double its sequential record fourth-quarter results because of significantly higher selling values and strong shipments, more than offset marginally higher steel input costs. The nonresidential construction sector remains strong as evidenced by robust order activity, resulting in a historically strong order backlog with record forward-pricing for SDI’s steel fabrication platform. The company says it anticipates this momentum to continue through 2022 based on these dynamics.

Fastfeed Corp.'s product line includes vibratory feeders and turnkey systems, like pick-and-place, dial assembly, robotic and vision systems.

Cleveland-based The Cleveland Vibrator Co. (CVC), a manufacturer of custom industrial vibrators and vibratory equipment, has acquired Fastfeed Corp. in Lodi, Ohio.  

"We are excited to add the manufacturing, design and problem-solving capabilities of Fastfeed," says Craig Macklin, CEO of CVC. "This acquisition immediately enhances our offerings and value to our customers as a single-source provider of vibratory solutions for flow and processing challenges with bulk material and parts."

According to a news release from CVC, Fastfeed Corp. is a provider of automation systems for parts alignment, feeding and handling. The company was founded in 1997 and designs systems that solve customer application problems. The company’s product line includes vibratory feeders and turnkey systems, like pick-and-place, dial assembly, robotic and vision systems.  

Fastfeed's facility in Lodi will remain in operation. The company anticipates adding a handful of jobs between the Lodi and Cleveland locations during the next few years.   

"Since Fastfeed was founded by my family in 1997, the company has been committed to designing unique systems that solve customer application problems," says Dan Reed, president of Fastfeed. "We look forward to growth and penetrating new markets as part of Cleveland Vibrator Co."