Steel Products

Asian Scrap Markets in a State of Flux

Written by John Packard

Written by: Damon Sun, Daido International

The Far East and Asian markets are in a definite flux versus the USA market.

I will preface my explanation with, the ferrous scrap markets in Asia increased in February first while the USA scrap markets were down in February.

With that in mind, the scrap markets in North America is one part catch up on the increases and one part actual demand (considering harsher weather in the upper Midwest). Asian scrap markets between December-February increased approximately $35-$40/metric ton, with continued strength in February versus USA markets which tended to drift lower during this period. East and West Coast USA will be up approx $10-$15/ton on mainly domestic USA demand.

The finished demand in Far East Asia is pretty dead at the moment, with mills in the last 3 weeks unable to secure orders for long products and especially rebar. One exception is Hot Roll Coils and Cold Roll. Demand on coils is pretty decent and there are price increases being passed down $35-$40/metric ton. However, this is also somewhat a catch up as HR coils were much weaker in the December-February period.

USA West Coast Bulk sales have been weak, and containerized demand for this current period is also weak. USA suppliers are attempting price increases on scrap but there is resistance as finished sales in Asia are weak, and inventory on rebar is piling up. Some mills have already reduced operating rates because of the pile up on inventory (2 shifts instead of 3 shifts). Prices on ferrous scrap have come down since last week about $10/metric ton. Japan H2 recent export tender sales down 500-1000 Yen ($5-10/metric ton). South East Asia is also weak and in particular, the HR coil market prices are drifting lower in that region.

I do not have a good assessment on this market. I am looking to the iron ore market mainly for direction and iron ore to China is still drifting lower (India 63% Fe as benchmark) to $145/dry metric ton basis range (down $10-$15/DMT from highs in January).

On the East Coast ferrous exports, Turkey has remained rather quiet last 10 days. My expectation is that the East and West Coast (although announced price increases about $10/ton); will probably fall back in Mid March. Collections off the West Coast have been good and increasing. There is quite a bit demolition projects for new construction in many areas and it’s nice to see the construction economy picking up this year.

The Midwest region of USA is where the real demand for ferrous scrap is and where there may be collection issues, and those prices most likely will hold.

Currency exchanges are within a range and not anticipating any drastic changes now. The bulk of Japan’s depreciation against US dollar has taken place (October Yen: US$ 75:1 versus 94:1 now).

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