THE SCRAP STEEL MARKET has reheated to the point where prices have jumped nearly 10 percent in April, much to the surprise of most U.S. dealers.

Industry sources said the average rise of $12 a metric ton to $112.85 for industrial grade scrap bundles was fueled by worldwide demand for both scrap and finished steel prices. Scrap steel is a major ingredient in primary steel- making.Si Wakesberg, an economist at the Institute of Scrap Recycling Industries Inc. said the scrap market also tightened because foreign steel supplies are down and more steel is being absorbed abroad. "There has been a spurt in scrap export demand," that has resulted in keen competition for the smaller available supplies, he said.

The American Iron and Steel Institute said U.S. imports of steel from the European Community has declined more than 30 percent in the first two months of 1990 compared with the comparable 1989 months. The U.S. steel operating rate is close to 90 percent.

Mr. Wakesberg said most dealers weren't prepared for the explosive demand. Both East Coast and West Coast scrap shippers have seen good demand for scrap

from foreign buyers in the past few months. Some Asian buyers, including Korea, are "resisting" some of the higher prices. A scrap dealer admitted last week that he's been "deluged with phone calls from buyers who need material overseas," including shipments to Egypt and India. Scrap dealers note that Turkey remains a heavy buyer of scrap steel.

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THE COMPOSITE PRICE for No. 1 heavy melting scrap steel, with the help of higher scrap copper prices, is what's keeping the The Journal of Commerce Industrial Price Index from declining. The index has been under pressure from falling plywood prices.

The benchmark price (an average of prices in Chicago, Pittsburg and Philadelphia) was chosen for the index because it is considered a good barometer of economic activity. The Journal of Commerce index itself is considered a leading indicator of inflationary expectations.