US scrap export market cools down

There has only been one cargo transacted from North America over the last two weeks. This cargo changed hands at $359.50 per metric ton (mt) for HMS 80/20 and $379.50/mt for shredded delivered to Turkey.

These prices represented a premium over the recent sales to Turkey from Northern Europe, where most purchases have been made. It is unclear what the buying activity will be in Turkey in the 10 days until Ramadan starts.

The prices for bulk export scrap would have to rise considerably to draw scrap from the North American East Coast in relation to prevailing prices being paid by domestic mills.

Shredded prices have reached a minimum of $420 per gross ton (gt) domestically. Further increases are expected as we go into March. Even #1 HMS has earned an increase of $30-40/gt in most districts, bringing the buying price into the upper $300s, depending on the mill location.

The last export sale to Turkey had shredded at $385/gt and HMS 80/20 at $365/gt, with approximately $27/gt in freight. This price dislocation should inhibit exports to Turkey in favor of domestic shipments both in February and likely in March.   

US East Coast, West Coast

Regarding container business off the US East Coast, prices being offered for shredded in in the mid-$340’s per metric ton on an FAS basis. These offers are getting basically no traction from US shippers as domestic prices are far above this figure.

Over to the US West Coast, prices for containerized HMS 80/20 have moved up to the low $300s to Taiwan. However, there doesn’t seem to be any real strengthening ahead as the Far Eastern markets are still suffering from ongoing Chinese billet exports at cheap prices. Bulk exports from the US West Coast have been more active, with demand from South America keeping prices relatively stable.

Outlook

A scrap executive spoke to SMU about the export market projections, saying steel tariffs of 25% are most likely going to result in increased steel production in the US.

Ferrous scrap, which has been traditionally earmarked for the export markets will be captured by the domestic markets to a certain extent. But it will not be enough to prevent scrap prices from rising due to increased melt rates in the US.