Ferrous export market defies gravity as prices steady amid domestic freefall

In contrast, domestic market prices for shredded and P&S dropped $20/gt on average in June and may retreat further in July.

Shredded scrap is now $365-$380/mt, depending on the region, while P&S is about $340/mt outside the Great Lakes. Prices for all obsolescent grades have been falling since February.

Why have export prices not followed the domestic market downward?

It’s generally acknowledged there is a scrap shortage in Northern Europe. This has prompted Turkey— the world’s largest importer of scrap requiring 1.5 million-2 million mt per month— to turn to North America to fill the void. However, with declining US market prices, the expectation was for cheaper prices in Turkey.

RMU reached out to a large exporter for insight. He noted that North American scrap prices had been superior to export prices on an FOB basis over the last two to three months. There were sales to Turkey, but it wasn’t until domestic prices dropped that export prices aligned with domestic prices.

If export prices had decreased from their previous levels, exporters might not have found it advantageous to sell abroad. The recent domestic market decline allowed Turkey to purchase necessary scrap at consistent prices.

Looking ahead, the exporter predicted a $5 increase in export prices, followed by potential retreats as European summer vacations impact economic activity.

Another scrap executive in the Southeast mentioned that stable export prices along the East Coast kept prices steady despite interior drops. Mills in these areas compete with exporters for scrap delivered to terminals. He expects sideways prices in July.

A source in the Northeast told RMU that export prices will likely remain steady until mid-September, with no significant increases until after the US presidential election.

If US and Canadian ferrous scrap prices continue to fall in July, it will be interesting to observe the impact on exports.