Following an increase of approximately $40/long ton in December 2007, scrap prices took an even larger jump in January, with factory bundles going up approximately $100/long ton, and busheling and shredded scrap increasing approximately $80/long ton from last month.
The enormous jump in scrap prices in the current month was mainly due to seasonal factors resulting in strong demand from domestic mills, as well as strong demand from the international market. As winter is a difficult period for the collection of scrap, availability tightens up, which pushes up scrap prices this time of year. For example, large scrap consumer Nucor was concerned that they may not get enough scrap supplies in January and February and so they upped their purchases.
In the Midwest, busheling scrap is currently going for $410 to $420/long ton, and shredded scrap is sold for $385 to $395/long ton, while HMS I ranges from $330 to $340/long ton. However, scrap prices are still fluctuating and have not necessarily settled down yet this month. Because the price went up so quickly, some believe that prices have already started correcting downwards to a small degree. People are still trying to figure out the January prices, but most believe the February prices will remain at a high level. If there will be an increase, it will be more modest than the one in January.
The pricing trend is still up, as domestic scrap prices will most likely try to catch up with the higher level export prices. Demand for steel is still not strong but should increase slightly in the upcoming months, which should give another boost to scrap demand.
The scrap export market is very strong and active, especially for shipments to Turkey, where the rebar market is doing phenomenally well. In addition, certain Black Sea ports typically freeze over during the winter time, and the CIS scrap supply is now limited, so the Turkish mills are currently buying mostly from the US East Coast and Europe. Also, the weak US dollar is facilitating the strong export market.
SteelOrbis has learned that a US scrap booking for February shipment was recently made by a Turkish mill. The cargo is composed of 20,000 mt of HMS I/II 80:20 scrap and 20,000 mt of shredded scrap, booked at $460/mt CIF Nemrut.
The most recent USITC data available show that during the month of October 2007, the top recipients of shredded scrap from the US were: South Korea, at 83,000 mt; India, at 78,000 mt; Taiwan, at 66,000 mt; Malaysia, at 62,000 mt; and Turkey, at 60,000 mt. Thailand, Mexico, Greece and Egypt also imported some tonnage of shredded scrap from the US in October.
The top recipients of HMS I grade scrap from the US in October 2007 were: Malaysia, at 53,000 mt; Turkey, at 49,000 mt; South Korea, at 39,000 mt; and Taiwan, at 38,000 mt. Some other countries which imported HMS I grade scrap from the US in October include Egypt, Mexico and Thailand.
The total amount of ferrous scrap exports from the US in October 2007 was 919,000 mt -- 186,000 mt more than the amount exported in September.
As for pig iron imports, year to date (January to October 2007) statistics show that the top countries from which the US imported pig iron were: Brazil, at 2,925,195 mt; Russia, at 992,583 mt; Ukraine, at 282,360 mt; Canada, at 95,298 mt; South Africa, at 86,600 mt; and Trinidad & Tobago, at 47,133 mt. Year to date (January to October 2007) the total amount of pig iron that the US imported was 4,429,274 mt.