In 1968 there was an American college football game between two Ivy League schools, Harvard and Yale. Harvard, an underdog entering the game, scored 16 points in the final 42 seconds to miraculously tie Yale 29-29.
The following day, the Harvard Crimson student newspaper ran the now famous headline "Harvard Beats Yale 29-29."
I could not help but recall the game and the headline as I surveyed the scene around the hotel lobby at the recent annual ISRI Commodities Roundtable Forum in Chicago.
Stunned scrap dealers did not know what had just hit them. They were wandering around like they had just blown a 16-point lead in 42 seconds.
Expectations of $20-$40/lt price increases for ferrous scrap on September 5, had given way to reality on September 7, unchanged pricing.
In this case the scrap suppliers were Yale and the steel mills were Harvard.
Our September 7 headline in the SBB Daily Briefing and Steel Markets Daily may have sounded like the Harvard Crimson:
"September US scrap collapses to sideways"
How can something collapse, yet remain unchanged?
Pricing did not move, but it sure felt like a collapse and felt like a major win for steel mills.
For the better part of August, scrap suppliers, brokers, traders and even steel mill scrap buyers were adamant that the market in September was poised to rise by a minimum of $20/lt.
Scrap suppliers left their offices after work on Friday, September 1 to descend on a three-day weekend with thoughts of bullish pricing for the following week.
After work on September 1 the scrap suppliers headed into the three-day extended weekend with bullish pricing expectations for the following week.
After the US Labor Day holiday on Monday, September 4 the market returned on the Tuesday and began discussions. By Wednesday, September 6, as scrap suppliers began to convene in Chicago for the forum, things were beginning to unravel.
Steel mills pulled back, reducing their shopping list for scrap requirements. They were intent on buying the bare minimum of scrap in what they believed was an overly inflated market. Sellers had the opposite mentality, as the market showed signs of cracking, they were intent on selling everything.
Disciplined buying met frantic selling and the end result throughout the Midwest was sideways pricing.
"The sky is falling," was overheard in the hotel lobby.
"Sticker shock," was also overhead.
The price had not even changed!
Such is the nature of the US scrap market, that trades one week out of the month. And in that one week, the market usually trades over the span of 72 hours.
A typical month in the US scrap market could feature 20 business days of talk and three days of actual trading. In a situation such as this, US scrap suppliers are unable to get points on the board even with strong mid-month macro indicators swirling around the world.
"Everybody was talking about up money and nobody had a sale," one Ohio scrap supplier said. Worse yet, shredders began to raise their offer prices to their local peddlers, to increase their flows to take advantage of the perceived September increase.
"Guys jumped out and quoted up, that is the undisciplined nature of our business," the supplier continued. "You give it away before you get it and sometimes you don’t get it."
Midwest scrap suppliers certainly did not get "it" in September.
In 2008, a documentary was made about the famous Harvard/Yale game, also titled, "Harvard Beats Yale 29-29."
No word on whether or not a documentary will be made about the September buy week, but one mill buyer already had a working title in mind: "September 2017…the market that never was."