US scrap market weakens in October

The domestic scrap market in the US is suffering from fourth quarter weakness, as is the case with the finished steel products market. The pricing trend at the moment is slightly down. After auto bundle prices from the major automakers dropped by $30 - $35/long ton early in the month, busheling scrap prices followed suit, dropping approximately $30 /long ton. Shredded scrap prices fell an average of $15 /long ton, while HMS I and II prices remained stable. Busheling prices now range from $245 -$255 /long ton, while shredded goes for $230 - $240 /long ton. HMS I still ranges from $200 /long ton to $210 /long ton, and HMS II ranges from $195 /long ton to $205 /long ton. Domestic scrap suppliers expect prime grades of scrap to continue softening in the fourth quarter, though the consensus is that heavy melt prices should remain stable, thanks to plenty of export interest from overseas. Shredded prices will most likely continue to register slight decreases, largely due to the softening long product markets and large inventories. Busheling prices will also see more decreases in Q4, softening along with the flat rolled market. Planned maintenance outages at major flat rolled mills will also ease demand for busheling scrap. However, the lack of demand for scrap right now may be balanced by the difficulties of collecting scrap during the winter months, which should slim down supplies. We should expect the scrap market to remain slightly depressed for the rest of the year, but as part of the slowness is seasonal, there is a good chance that the market will improve in early 2007. There is still a lot of export interest from overseas. On the East Coast, most shipments are going to Turkey, a growing consumer of US scrap. The melting capacity is expected to increase in the fourth quarter, which should keep Turkey's demand for scrap high. Ukraine and Russia are not offering much scrap to Turkey right now, so they are depending on the US to fill their scrap needs. On the US West Coast, there is still plenty of interest from Southeast Asian countries like Thailand and Malaysia. As for the export scrap pricing trend, demand from importing countries is high, but it is doubtful that it will remain strong enough to counteract the weaker domestic market. There hasn't been any letup in export prices yet, but the pricing trend is now slightly down. Pricing for completed offers of US scrap to Turkey have stayed relatively stable since last month. SteelOrbis has reported that a Turkish mill has concluded a 30,000 mts of mixed scrap cargo booking ex-US at $279/mt CFR Marmara for November shipment. Fifty percent of the cargo is shredded scrap, while the remaining 50 percent is HMS I/II 80:20 scrap. The most recent full shredded scrap cargo booking ex-US was at $282/mt CFR Marmara, Turkey for November shipment. This sale is approximately $1 /mt higher than comparable sales completed in September. The most recent USITC data available shows that during the month of August, the top recipients of HMS 1 and HMS 2 grade scrap from the US were: Turkey at 88,158 mt, Malaysia at 61,000 mt, and Egypt at 61,000 mt. These were also the top three importers of HMS from the US in July. The top importers of shredded scrap from the US in August were: Turkey at 87,000 mt, Malaysia at 85,000 mt, and Mexico at 47,000 mt. Other major buyers in August include Greece, Peru, Asia, and China. Thailand, which imported 89,000 mt in July, did not import any shredded scrap tonnage in August. The total amount of ferrous scrap exports in August totaled 1,293,000 mt, the highest monthly figure of scrap exports this year. However, 412,000 tons of this figure were cast iron waste and scrap sent to Vietnam. Without this tonnage, the monthly export total is average compared to the rest of the year.