Recycled Steel Market Faces Declining Prices and Uncertainty as 2024 Ends

Price Declines in December Mark a Disappointing End to 2024
The U.S. recycled steel market is closing 2024 on a low note, with price declines during December signaling a challenging end for processors and shippers of ferrous scrap. Bids from domestic mills were lower by $1 to $5 per ton compared to November, and overseas offers were also disappointing. This pattern of price weakness was evident throughout the year, with recycled steel prices seeing limited increases, leaving processors with minimal gains in inventory value. According to Davis Index, the price for No. 2 shredded scrap increased in only two months of the year—by $11 and $2 per ton—making it difficult for businesses to capitalize on a profitable market.

West Coast Scrapyards Hit Four-Year Low as East Coast Shows Limited Strength
On the West Coast, the price of containerized ferrous scrap hit a near four-year low in mid-December. Shredded scrap was valued at just $303 per metric ton, free alongside ship (FAS), a worrying sign for those relying on higher prices for profitability. Meanwhile, the East Coast market showed some positive movement, with prices for heavy melting steel (HMS) scrap rising by up to $11 per ton in early December. This was primarily due to higher demand from Turkish mills, which indicated a slight rebound for U.S. scrap exports to that region. However, the overall picture remains grim as other global markets show little recovery.

Port Labor Disputes Threaten to Disrupt U.S. Scrap Exports
Further uncertainty hangs over the recycled steel market as the International Longshoremen’s Association (ILA) workers’ union faces a potential strike in mid-January 2025. The dispute revolves around automation concerns, and if unresolved, it could severely disrupt U.S. exports of recycled materials. As much as 54% of the U.S. recycled product exports pass through the affected ports, making a resolution critical for ensuring smooth trade flows. Trade associations, including the Recycled Materials Association (ReMA), have urged both parties to come to the negotiating table before the January 15 contract expiration.

Fitch Forecasts Steel Demand Increase but Lowers Scrap Processor Expectations
Looking ahead, Fitch Ratings offers a mixed outlook. The firm predicts a rise in steel demand in North America for 2025, which could provide some relief to the market. However, it also cautioned that the scrap processing sector may not see much of this benefit. Fitch forecasts that raw material costs will remain low, and companies will continue investing in expanding production capacity for higher-margin steel, which could further pressure scrap prices. The strategic investments and focus on low-cost steel production could undermine margins for scrap processors who depend on higher metal prices to maintain profitability.