Obsolete scrap pinned by freight and weak export flows

In the Mediterranean, Italy has bought at least two cargoes over the last two weeks from the US, giving scrap terminals on the East Coast an alternative to Turkey. Mexico has been buying very sparingly from the Gulf Coast lately.

Several exporters contacted by SMU expressed the feeling that Turkish mills need to buy more scrap for November. It remains to be seen if export prices will rise further from $350/mt. But with the US market seemingly at a bottom, it’s a good bet it could.

SMU spoke with a North American exporter, who is not so sure the export market of the US East Coast will strengthen soon. He cites sluggish rebar sales and other economic woes affecting Turkey. However, he does believe we could be close to a bottom now. “I’m kind of on the fence right now”, he said.

As has been reported, the US market for obsolescent scrap has traded sideways since last May, until shredded dropped by $10 per gross ton this month. Several traders, whom SMU has spoken with, say part of the reason is the lack of export activity. Roughly, the US has been exporting just 6-8 bulk cargoes per month. According to a scrap executive involved in both domestic and international scrap trading, the US really needs to export 12-15 cargoes per month to put any pressure on domestic prices.

According to the Turkish Statistical Institute (TUIK), Turkey imported 9.4% less scrap this year in the Jan-Aug period than in the same period in 2024. The TUIK indicated imports from the US totaled 2.31 million mt through August, which is 21.1% less than in 2024.

When this decline is considered along with reduced exports to Mexico, limited exports to Asia (due to Chinese exports of semis and new steel in that region), and a low-priced container market, it’s no wonder obsolete scrap can’t gain any traction domestically. 

Another problem affecting exports is the recent elevation of bulk freight rates. Rates to Turkey have typically been $30 to $32/mt. Today, freight from the US to Turkey ranges from $40 to $44/mt. Freight to other countries in that region is even higher.

There seems to be a shortage of available vessels. Many have blamed the tariffs, saying there are not enough cargoes coming to the US. Shipowners have repositioned their fleets to the Asian and European theatres where there is more activity.