Rapid rebound: Ferrous scrap export prices soar

What a difference a week or two makes! When RMU last reported on the export market off the U.S. East and Gulf coasts in early September, it had just bounced off the floor of $360/mt CFR Turkey for HMS 80/20. The price of $370/mt was achieved as billet sales from China and Southeast Asia increased in price, making scrap more attractive. Over the last two weeks, the market has seen prices rise into the upper $380’s for a series of U.S.-origin cargoes. Northern European sales were just slightly below on a freight equivalent basis.

This is all happening while the North American ferrous scrap market is struggling to stay sideways amid continuing mill outages and spotty demand on the part of the flat-rolled steelmakers, both integrated and electric. However, the recent strength in export numbers should keep the domestic market no worse than sideways, thereby setting up a stronger November and December.

After a week off in Chinese steel trading due to the Golden Week holiday, billet prices have increased yet again on top of the rise that occurred prior to the break. This has added to Turkish demand for scrap. The stimulus provisions by Chinese banks have given optimism as Chinese steel exports may start to decrease. This, coupled with an increase in prices for Turkish rebar, have allowed scrap importation to Turkey to resume to prior levels.

The International Longshoremen’s Association (ILA) strike was thought to have played a role in the rise of exports to Turkey from the U.S., with one exporter concluding a cargo at a $7/mt increase just as the strike started. However, most exporters have discounted this, especially as offers continued to increase after the ILA tentatively settled. The strike mainly affected the export container trade. Hopefully, this matter will no longer be a factor as we enter the new year.

On the U.S. West Coast, things are still weak. The Taiwan container market for HMS 80/20 is languishing around $300/mt CFR CY and buying is limited. The bulk markets are still very soft since Chinese steel exports have weakened demand for imported scrap from the U.S. There is some hope of things improving with the recent stimulus in China.

RMU spoke to a scrap exporter who is a regular supplier to Turkey and other buyers in the Mediterranean Basin. He is not sure the recent strength in the export market can be sustained, even though the futures are in the low $400’s. The finished steel sector lacks foundation at this point and without it, prices will rise and fall within a smaller range. He believes we need steel demand to grow and stabilize before the steel and raw materials communities can breathe easier.