Overview of U.S. Scrap Steel Industry and Grading System for Scrap Steel

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Researched by Industrial Info Resources (Sugar Land, Texas). As reported by Industrial Info on February 20, 2006, there is a very large market for scrap steel and how it is used to make new steel. The annual U.S. market for scrap steel is 74 million tons, of which 16 million tons is used as feed to basic oxygen furnaces (BOF), 52 million tons is used as feed to electric arc furnaces (EAF) and 6 million tons is used as feed to foundries.

Steel mills purchase scrap steel according to the grade that will produce the new steel of required specifications. The main variables in scrap steel are chemistry (alloy content), particle size, and source of the scrap. The grading system for scrap is issued by the Institute of Scrap Recycling Industries (ISRI), headquartered in Washington, D.C. The specifications are titled “Guidelines for Ferrous Scrap, FS-2005” – and are issued yearly. There are 122 specifications included in these guidelines all listed under four main headings.

The first category is Heavy Melting Steel. There are 28 specifications in this category divided by particle size and source of the steel. The sources range from construction materials to junked cars. The most common heavy metal steel has an ISRI Code 200 and is referred to as No. 1 heavy metal steel, sized at 60 X 24 inches and ¼ inch or over in thickness. ISRI Numbers 201-206 have the same specifications except for sizes. Specifications for scrapped cars (ISRI 210) are for steel shreds to be bailed to a density of 50 pounds per cubic foot.

The next ISRI main category is Electric Furnace Casting and Foundry grades (ISRI 229-251). These mostly refer to cut plates and bars cut to given sizes. Maximum phosphorous and sulfur are also specified.

Cast iron grades (ISRI 252-266) are mostly destined for foundries. The most used is cupola cast iron.

Specifications for special type scrap include sources from scrap tires, railroad ferrous scrap and machine shop turnings.

Prices for scrap are provided daily by the newspaper American Metals Market, for scrap delivery to fourteen cities. The newspaper does not cover all the ITSI specs, but prices the scrap with the most demand. A summary of current prices is shown below.

American Metal Market -Scrap Iron and Steel Prices Estimated Consumer Buying Prices, $Ton, Delivered

No. 1 Heavy Metal – Range $205 - $210 – Depending on Destination
(6 categories)

Machine Shop Turnings – Range $100 - $140 – Depending on Destination
(3 categories)

Cut Structural Plate – Range $240 - $280 – Depending on Destination
(3 categories)

Cupola Cast – Range $160 - $215 – Depending on Destination
(4 categories)

No. 1 RR Heavy Melt – Range $230 - $255 – Depending on Destination
(4 categories)

Clean Used Densified Cans – Range $180 - $230 – Depending on Destination

The path that ferrous scrap takes on the route from original scrap discharge to the melting furnace to make new steel is described next. The classified directory of every city has a section entitled “scrap”. If ferrous scrap is available to anybody wanting to discard this, they can take it to a local retailer, who in turn sells it to a scrap processor. This group of companies will tailor the scrap to meet ISTI specifications. This could include sheering, bundling, separating or otherwise handling. ISTI reports that there are about 1,000 members who are scrap dealers – but the total number of these dealers has yet to be determined - maybe 2,000. These dealers sell the “bundles” to steel mills, often through brokers.

Industrial Info Resources (IIR) is a Marketing Information Service company that has been doing business for over 23 years. IIR is respected as the leader in providing comprehensive market intelligence pertaining to the industrial processing, heavy manufacturing, and energy-related industries throughout the world.