An annual scrap industry event in St. Louis every February has grown in mass and scale over the past decades. Once a regional chapter dinner, it is now a full-scale party that attracts scrap dealers and mill buyers from across the country.
ISRI’s Mid-American Consumers Night banquet on Tuesday evening is the main event, but meetings begin as early as breakfast on Monday. Industry friends begin gathering in the Union Station Hotel lobby well before the start of the banquet, and this year’s event brings back memories of last year, when scrap suppliers were reeling from a February price crash that finalized just days earlier.
The annual open-bar themed banquet rages all night with drinks, food, entertainment, drinks, music, and more drinks. Needless to say some attendees head for the airport Wednesday morning bleary eyed.
At last year’s 68th annual Consumers Night, scrap dealers showed up to the event bleary eyed, having landed in St. Louis looking like they had just seen a ghost. What they had really seen was a $100/lt price plunge, the likes of which had not been experienced this decade.
There was shock, disbelief, and a certain numbness among the dealer base at the event.
Looking back at my coverage a year ago, the first sign of the February price crash were evident in a story published Jan. 19. The headline read “Weak fundamentals undercut US scrap prices.” After raising prices around $20-$30/lt during the January buy week, mill buyers cell phones rang off the hooks, their inboxes were flooded with emails from dealers and they quickly pulled back.
Mills eventually bought at sideways and then shut their doors. Scrap was left unsold and it began to overhang the market, setting the stage for what would soon become the ‘F-word’ for a dealer base — as in “February 2015.”
A year has passed since that fateful February buy week and pricing still has not recovered, but this year’s Annual Consumers Night will have a different feel to it.
Pricing is actually lower now ($190-$200/lt delivered mill for shred in the Midwest) than it was last year post-‘F-word’ ($245-$260/lt). But the supply-side has done a better job of adjusting to this new norm. There is no China to bail us out this time, like there was in the 2008 crash — just hard work and rationalization.
There have been idlings, adjustments, restructuring and, unfortunately, shutdowns and bankruptcies, but for those left standing in this market and on hand in St. Louis this week, there will be a reason to raise a glass and make a toast to surviving.
February 2015 set off a chain reaction in the market, and survival of the fittest is the basis of evolution and efficiency. While 2016 is still young, Tuesday night will be a good chance to assess how things may look for the year. Cheers!