Scrap export market shows signs of weakness

Well, they were right. There was an initial series of purchases between $335-337/mt from European scrap terminals. This week, Turkish steelmakers cracked the $330/mt threshold and bought at least three HMS cargoes at prices as low as $326/mt CFR. All of these cargoes were sourced from Northern Europe and the UK. 

Meanwhile, in North America, ferrous scrap was being lightly traded on the export front. However, prices remained firm, hovering in the range of $345-347/mt CFR.

Many exporters felt there could be some improvement going into September as they saw the initial signs of resistance to the lowering scrap prices here and abroad.

But when the European price started to fray, the message was clear. The latest sale from the US dropped about $10/mt into the mid-$330s for HMS and the mid-$350s for shredded.

These price declines are happening against a backdrop of increased maritime transportation costs. There has been surge in rates to Turkey, as well as other destinations. The average freight from the US East Coast to Turkey has risen from roughly $28-30/mt into the high $30s depending upon cargo composition and ultimate discharge port.   

SMU spoke with a European-based scrap executive about how the market will behave going forward.

He said mills in Turkey are still trying to lower prices to about $320/mt CFR from N. Europe. He was not sure if this is possible. The Turkish mills have been relying on Europe for most of their imported scrap. It is possible this has depleted much of the supply from this region.

He also mentioned US suppliers may make “convenience” sales this month, but as the winter months approach supply will tighten, which will push up prices.      

Activity from the West Coast has been limited, both bulk and containerized. The traditional Asian buyers have been flooded with Chinese steel, mainly semi-finished, sources said. This has reduced their appetite for imported scrap. The container trade to Taiwan remains weak with price offers below $300/mt CFR.