-As expected scrap prices fell approximately $50/ton in last week’s auctions.  Heavy met grades fell less than the shredded/prime grades of scrap.   On the other hand, spot iron ore reversed its fall and gained about $7 tonne last week.  Much of the scrap fall was already baked into mini-mill prices over the last two weeks.  While if you spoke to anyone at the minis they would only admit that scrap was going to fall $20-30, expectations were for more than that.  Once the Flack Steel numbers are updated, band costs should be less than $600.   Pig Iron prices are also falling – large inventories persist. 

-There was the typical knee jerk reaction from the mill community last week after the Severstal announcement.  Quotes were pulled off of the table and prices of between $32 and $34 were being sought.  Up about $40 on average.

-Order entry at the mills has been strong – the question remaining in the marketplace is what is behind the surge in orders over the last two weeks.  Automotive builds remain strong (one reason that prime grades of scrap fell) and OCTG, rail and other markets remain strong. 

-Import is not really a factor – raising the question of just how much “over-capacity” really exists vs. real demand.  Imbalances in real and apparent demand are quite possibly influencing the price curve more than capacity vs. real demand.  Service center volumes remain steady and growing slightly.  We may not be as out of balance as the headlines would have us believe.