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The unique nature of the US ferrous scrap trade makes for some tense moments and critical decisions. A steel mill’s entire month of scrap requirements are generally priced and purchased in as little as a few days, if not a few hours. Buyers have precious little time to decide what grades of scrap make sense at what prices.

Enter the optimizer.

The computer program is used by a mill’s scrap buyer when he takes his grocery list of ferrous needs to the store (aka the scrap market). The buyer enters as much information as possible and the optimizer tells him the best mix of scrap grades to buy. It’s an overlooked technology in the steel industry, which is otherwise teeming with technological solutions.

“Basically it looks to meet chemistry requirements the cheapest way possible,” one scrap buyer explained. Some mills use tried-and-true formulas, other optimizers are internally developed. “Some are far more sophisticated than others.”

There are a lot of variables to consider month-to-month when it comes to buying scrap. For example, heavy melting scrap takes longer to melt than No. 1 busheling scrap. The longer it takes, the more energy is consumed. Energy rates also fluctuate. The optimizer takes all this into account.

Mill order books for finished steel also fluctuate. For example, some mills with a wide range of products make steel grades that are copper-restrictive and require higher-quality scrap.

The optimizer can take into account price differentials between grades, power consumption needed to melt those grades along with the accompanying carbon costs, all while being cognizant of the mix of products that the mill will need to produce that month.

“We look at melt times by grades,” a scrap buyer for an electric arc furnace mill source said. “Slag characteristics are factored in … yield is important … cycle time between melts … all these things factor into what we do.”

A scrap buyer at an EAF sheet mill noted that optimizers “advise” about the cheapest mix of scrap grades possible “given market and operational constraints” to meet forecast production at a particular mill site. The key word here is “operational.” In July, when prime scrap prices rebounded and shredded prices sank, some mill scrap optimizers were reportedly telling scrap buyers to purchase exactly zero tons of prime material.

That would not be operationally feasible for most steel mills but it was very telling. It show...