Scrap Prices North America
China’s Poised to Disrupt the Ferrous Scrap Market
Written by Tim Triplett
April 3, 2018
China will control the global ferrous scrap market, it’s just a matter of time, says scrap expert John Harris of Aaristic Services, Inc.
China produces about half the world’s steel every year and has accumulated a scrap reservoir more than sufficient to meet its domestic steelmaking needs. There is little reason for China to import scrap, except in instances where it can supply mills near the coast with lower cost scrap purchases from ocean cargoes. Yet the Asian giant has recently upped its percentage of purchased scrap to around 9 percent from 3-5 percent in an attempt to influence the market price. “It’s not working,” said Harris. “We can definitely expect large increases in Chinese scrap exports in the near future as they perfect their logistics.”
Commenting on a recent article in Steel Market Update’s Premium newsletter (“Scrap Trade: Expanding with Global GDP”), Harris said he believes Figure 9 overstated the steel and scrap consumption in the U.S. and China and he offers the following amendments (see chart below):
SMU’s Figure 4 indicated that the U.S. share of the global scrap market peaked at 36.2 percent in the third and fourth quarters of 2008 and stood at 22.2 percent in Q4 2017. SMU attributed the decline in the U.S. share to the strengthening of the U.S. dollar. Harris believes the long-term decline in U.S. market share is more a result of the China growth factor than the strong dollar.
Of Steel Market Update’s conclusion, Harris is in complete agreement: China has more surplus scrap than the total of global scrap trade, which sets the stage for an eventual massive disruption of the global scrap market.
Tim Triplett
Read more from Tim TriplettLatest in Scrap Prices North America
RMU: The most underappreciated scrap grade
Over the last several years, I have noticed widening spreads between #1 Heavy Melting Steel (ISRI 201) and Shredded (ISRI 210,211), as well as Plate & Structural (ISRI 232).
Domestic scrap tags flat in April
April scrap prices came in sideways in the US, sources told SMU.
RMU: Interest rates, weather hit Radius Recycling’s earnings
Low manufacturing activity and higher interest rates took a toll on Radius Recycling’s profits during the Oregon-based company’s most recent quarter. Radius reported a net loss of $34 million, or $1.19 per share, during its fiscal second quarter. In the previous quarter, Radius saw a net loss of $18 million, or 64 cents per share.
RMU: Northern buyers enter April scrap market sideways
Several large buyers in the North came into the market on a sideways basis from prices paid in March. The development comes after recent speculation about what prices US-based steelmakers would pay for scrap for April shipments.
Miller on scrap: Market seeks direction ahead of April buy
On the eve of the April ferrous scrap buy, there is no firm consensus on the market’s direction. The safe predictions are “soft” sideways to “strong” sideways. That may mean down $10 per gross ton (gt) to up $10/gt.