A study of the relationship between regional ferrous scrap prices in the USA, 1958–2004

This paper discusses univariate and mulitvariate methods used to deal with seasonal data with special emphasis on periodic models. These models are examined within the context of three regional U.S. ferrous scrap prices. All these variables can be described as being periodically integrated. The periodic models identified will be of use in assessing the future profitability of electric arc steel making. These scrap prices are shown to be periodically cointegrated in three of the four quarters with rapid speeds of adjustment to these long run equilibria. The cointegration relations have implications for the location of minimills.