The ratio between US shredded scrap and iron ore prices delivered into China reached a seven-year high this week. Shredded scrap prices in the US Midwest of $262.50/lt this week were 5.5 times the price of the Platts IODEX Friday, of $47.75/dry mt, the highest the ratio has been since 2008. The ratio reached 5.3:1 in January of this year but quickly dropped to around 4.4:1 after US scrap prices fell around $100/lt in February. Despite US scrap prices remaining stable since the February price drop, the ratio has once again topped 5:1 due to the remarkable erosion of iron ore prices over the past fortnight. Iron ore prices were above $55/dmt as recently as March 25.
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