Final Thoughts

As SMU noted in our Tuesday edition, the ferrous scrap market in the US traded sideways again. There were a few reports of some buyers trying to lower prices a bit.  But sideways is the consensus.

In the export market off the US East Coast, scrap has traded sideways once more. The same for European exports to Turkey, with HMS 80/20 stagnating between $342-346 per metric ton (mt) CFR.   

During July, the threatened tariffs on Brazil for Aug. 1 caused a panic in steelmaking sector. It looked as if pig iron would be included in the tariffs.

If pig iron couldn’t be imported from Brazil, the US-based hot-rolled hot-rolled coil (HRC) mills would have difficulty economically diluting their scrap charges in their EAFs. Scrap prices would have risen and other Ore Based Metallics (OBM) would have also increased.

As we all know now, the ad valorem tariff of 40% on pig iron and iron ore was exempted at the 11th hour. Shortly after this, US mills decided to refill their Brazilian pig iron pipelines and booked four cargoes (approximately 200,000 mt). The price? You guessed it: Sideways!

SMU spoke with two sources in Brazil who confirmed this information.

The price on at least two of the cargoes was $401/mt FOB Brazil ($430/mt CFR) without the now-reduced tariff of 10% applied. The other two cargoes were similarly priced, according to our sources.

This sideways movement is a relief for US buyers and for Brazilian producers. Perhaps it is a disappointment for the scrap industry, whose prices would have seen improvement if pig iron became scarce or expensive.

So “sideways” can go either way, depending on where you are on the procurement spectrum. Hopefully, though, it won’t last because it is getting boring.