Steel Products Prices North America

Scrap Exports Down 15.4% for First 8 Months 2015

Written by Peter Wright

In the first eight months of this year bulk scrap exports were 8.801,000 tonnes for an annual rate of 13,202,000 tonnes, down by 15.4 percent from the first eight months of last year. The tonnages shown in Figure 1 are based on three month moving averages for 2015 and on the twelve month monthly average for previous years.

The graph shows that exports declined for three consecutive years, 2012 through 2014 and continued through January and February this year. March saw a trend reversal that continued through May with a small decline in June a larger decline in July that continued through August. In the twelve months of 2014, scrap exports totaled 15,308,000 tonnes, down by 17.1 percent from the same period in 2013.

In the single month of August, Turkey was the major destination with 293,000 tonnes, followed by South Korea with 171,000 tonnes. Turkey has been the major destination in seven out of eight months this year but by all accounts the purchase of scrap by Turkish mills is being reduced by semi-finished purchases from China. Semi-finished imports from China as well as from Russia and Ukraine have supported struggling Turkish producers, despite it being at the expense of production from their own steelmaking facilities. In the short term at least, unless scrap prices fall to a level acceptable to Turkish steel mills, semi-finished imports will remain an increasingly favored feed to their rolling mills. US scrap prices for October are expected to fall substantially and may be reported as soon as tonight (Thursday) by the AMM. This may relieve further downward pressure on scrap prices depending on the magnitude of the correction and will tend to level the advantage currently being enjoyed by global integrated mills whose major source of iron units is iron ore.

Figure 2 shows the declining US share of global scrap trade and the increasing share of Russia and Japan as the Ruble and Yen have declined in value.

Figure 3 shows the tonnage shipped into Turkey from their three major sources and the degree to which Russia has replaced the US as a scrap source.

US scrap exports to the Far East through the first eight months were down by 32.0 percent from last year as Japan picks up share in that region. YTD through August exports to Canada were down by 17.6 percent and to Mexico were up by 25.7 percent. Exports to India were up by 62.5 percent YTD and to South Korea and Taiwan were down by 34.2 percent and 25.1 percent respectively. Shipments to China YTD through August were 510,000 tonnes, down by 7.5 percent from last year.

Scrap export prices are reported by the AMM every Tuesday for an 80:20 mix of #1 and #2 heavy melt in US $ per tonne FOB New York and Los Angeles for bulk tonnage sales. Through September 30th the price on the East coast collapsed by $47.82/gross ton in the month of September and is down by $96 since the end of June. The West coast price is down by $63.80 since the end of June.

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