Steel Products

Asian Scrap Markets Regressing from the Recent Highs

Written by Diana Packard

Written by: Damon Sun, Daido International

The Far East markets will be rather quiet this week.  

Finished demand is still rather poor.   Mills were able to lift construction steel prices up about $10/mt, but scrap prices moved up $20/mt.  Rebar prices in Taiwan and in S. E. Asia have retreated/sideways from last week and mills are on a wait and see attitude on raw materials.    Steel mills will lose money on import scrap converting to rebar (approx. $12/mt loss).   So the dynamics on a continual increase in scrap prices into Asia do not look well.

Iron ore to China also have retreated from recent highs.  Swings in iron ore prices have been rather dramatic in last 3 weeks and we are definitely coming off the highs.

Plate prices and Coils seem to be doing well and holding/slight up trend.   But these were the most severely hit in last 3 months.

There has been a gradual change this year with mills moving towards bulk ship scrap versus containerized.  This is mainly due to quality concerns and container logistics costs have increased with shipping lines charging/supplementing the freight with container damage charges.   Likely this trend will continue as long as the price differences between containerized and bulk stay within a $20-$25/mt gap.   At moment, containerized HMS to Taiwan at $345/mt level CFR (down $5 from highs), while bulk offers at $375/mt CFR but most indications from the mill side at $365/mt level.

Currency exchange rates continue to be a major factor in Far East with the U.S. dollar fluctuating dramatically against any USA economic news.   Impact is most felt against the Japanese Yen.

Overall finished demand in Far East has been lackluster for 2013.   As example, Taiwan overall finish demand is down approx 30% with import raw materials demand down about 22% for 2012.

News from the USA regarding scrap prices trending sideways/slightly down also has affected the Asian mills wait and see attitude.

The markets should be rather lackluster for next 2 weeks.  Likely, we will be regressing from the recent highs for August.

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