US scrap prices rose by $15-25/long ton to five-month highs over the past two days, based on continued strong export demand, and a perceived increase in domestic flat products demand, as demonstrated by hot-rolled-coil price increases of $20-30/st by several domestic mills over the past two weeks. High prices for scrap substitutes, notably pig iron, also are said to be a factor.

This makes February the third-straight month in which scrap prices have increased. Prices for top grades are up by an average of $50/long ton, or roughly 20%, since the beginning of the year. The market took its latest bullish tone from factory auto bundle auctions held by Ford and DaimlerChrysler earlier this week, where the upper end of the bidding ranges are said to have touched $35/long ton.

Prices for No. 1 dealer bundles and No. 1 busheling delivered to the mill are both higher by $25-30 to a range of $280-285/long ton in the northeastern US region and eastern portions of the Midwest. Prices for standard grade shredded steel are up by similar levels to a range of $270-275/long ton, according to market sources.

Price increases for heavy grades were more muted at $15/long ton on average. Plate and structural scrap steel has been sold at $255/long ton, while No. 1 heavy melting scrap is fetching $250/long ton on a delivered basis. The price differential between the two heavy grades, typically around $10, thus is unusually compressed, a phenomenon seen for most scrap grades at times in recent months.

Imported pig iron is said to be priced currently at around $320/mt, CIF US port, which translates to prices above $340/mt to US consumers, in most cases. Supplies are said to be limited and delivery times extended.

Export scrap prices can be expected to rise in concert with domestic levels but the increase may be less robust, particularly if Turkish rebar producers hold off additional purchases into next month. Turkish mills purchased large tonnages of US-origin scrap over the past three months but were said to have taken a wait-and-see attitude by mid-January.