US domestic scrap prices have been on a rising trend since May, but as of mid-September, with the slowing export market, it seems likely that US scrap prices have ended their upward trek and will trend sideways to slightly down in October.
After the average $20/long ton ($19.68 /mt) price increase in early September, domestic scrap buying activities are slowing down. Several mills in the Midwest have recently restarted steel production at their blast furnaces, although after some buying flurry last month, their scrap inventories have increased to a comfortable level. While they will need to continue buying some scrap in order to maintain current production levels, it seems that the rush to buy that drove prices up strongly in the early third quarter is now over.
Meanwhile, the export market is decelerating, as the main countries that import scrap from the US are not buying aggressively. Turkey’s scrap purchasing activities are slow, and China is currently not interested in scrap either. As a result, there is no pressure from the export market so far to push domestic scrap prices upwards next month.
Although overall scrap demand remains sluggish on both the domestic and export side, there is still an overall shortage of scrap availability in the market, and this should keep the prices from falling significantly. Sales volumes are down but domestic scrap yard inventories remain low as well.
On balance, after five consecutive months of domestic scrap price increases, it is expected that prices are going to trend sideways to slightly down in October, with the coastal markets declining more than inland markets.
Currently, on the US East Coast, domestic busheling scrap prices range from $325 to $335 /lt ($320 to $330 /mt). Shredded scrap is offered at a range of $290 to $300 /lt ($285 to $295 /mt), and HMS I is in the level of $260 to $270 /lt ($256 to $266 /mt).
The latest USITC data shows that the total amount of ferrous scrap exports from the US in July 2009 was 1,276,000 mt, representing a decrease of 690,000 mt when compared to the figure of 1,966,000 mt in June.
The main recipients of shredded scrap from the US in July were: China, at 251,000 mt; Thailand, at 86,000 mt; Vietnam, at 72,000 mt; Turkey, at 64,000 mt; Malaysia, at 33,000 mt; and South Korea, at 32,000 mt. Countries that imported smaller amounts of shredded scrap from the US during the month include Taiwan, Indonesia, and India.
For HMS I grade scrap, the top recipients of US exports in July were: China, at 98,000 mt; South Korea, at 79,000 mt; Taiwan, at 65,000 mt; Turkey, at 32,000 mt; Malaysia, at 27,000 mt; as well as Vietnam and Indonesia, at 26,000 mt each. Thailand, India, and Mexico also imported some tonnage of HMS I grade scrap from the US during the period.