Domestic Taiwanese scrap prices encountered a roll back for two consecutive weeks that put pressure on US export scrap offers to Taiwan. The week ended November 18 experienced a decline of $10/mt with offers for HMS I/II 80:20 moving down from $250-255/mt CFR early in the week to $240-245/mt CFR. By week ended November 25, offers once again adjusted down $10/mt to $230-235/mt CFR.
According to a source close to SteelOrbis, “Offers are staying relatively stable this week near $230/mt CFR for 80:20 as scrap and finished goods prices in Taiwan’s domestic market have remained unchanged since last week. Active demand this week is weak as buyers are trying to read the mixed market signals the Chinese futures and other steel markets are undergoing.”
On November 30, the Chinese futures market downtrend resulted in raw materials and finished goods spot prices moving down substantially. For example, iron ore declined from the $81/mt high days prior to approximately $72/mt, both in CFR China terms. On December 1, though, the market regained confidence and iron ore gained ground to $78/mt CFR China. Mixed sentiment has been expressed in regards the ability of raw materials to maintain the upward pricing strength into 2017. On the one hand finished goods price offerings are increasing globally on the basis of raw material price increases, yet coking coal prices are not expected to continue climbing at the same rate which saw prices more than triple in 2016. Factors expected to reduce the tight coking supply include the new Indian import tax on Chinese and Australian coking coal, buyers pursuing alternative semi-hard coking coal shipments, and a variety of mining companies announcing additional coking coal production in early 2017.
Of note looking into 2017 is Moody’s recent issuance of a negative outlook for Asian steelmakers such as Japan, South Korea and Taiwan due to dampened demand resulting from recent trade barriers adopted by the EU and US. The dampened export potential due to trade barriers and potential demand decline from the Chinese market that Taiwan is predicted to experience could consequently reduce the volume demand of US origin scrap from that region.