Ferrous scrap continues to be in short supply in the U.S. as steel mills scramble to acquire enough material to feed their operations in the face of growing export shipments. That's why shredded steel scrap, a favorite furnace-charge material of the mini-mill steelmakers, has jumped in price by $240/long ton since January to $555 in mid-April.

The unprecedented demand for scrap that is driving prices to new records is taking place even though domestic use is stable because of burgeoning export sales. “Prices are not speculative; people need material—some people are dangerously short of raw material,” says Daniel W. Dienst, group CEO of Sims Metal Management in a Platts Steel Markets Daily story. “This is real demand against real supply.”

Available supplies of both obsolete and prompt industrial scrap are said to be at their lowest levels in years. Speaking to Platts Steel Markets Daily on the sidelines of the Institute of Scrap Recycling Industries conference in Las Vegas, Dienst said North America has become “supply challenged,” as domestic steel mill and foundry consumers are competing against foreign mills for limited supply.

Especially active are steel mills inside the BRIC bloc of nations, he says, referring to the developing economies in Brazil, Russia, China and India.

Harry Kletter, CEO of scrap processor Industrial Services of America, said during a panel discussion that “there is no scrap in the world,” emphasizing several times that there is just not enough material to go around anywhere across the globe.

In the U.S., industrial production is off as much as 30% in the Great Lakes region, which means less scrap being generated. Leading the decline has been reduced production by automakers. So, tonnages of factory-auto bundles of scrap traditionally offered in monthly auctions by automakers used to set the price for No. 1 heavy melt in the Midwest but tonnages have dwindled to the point that many processors now ignore the auction results and wait for market reports of various grades—from heavy melt sold in Chicago and Pittsburgh to shredded scrap in Chicago.