After two big increases ($40 /long ton in December and $80 /long ton in January), US scrap prices have shown signs of softening in February. Busheling scrap prices have decreased by approximately $10 to $15 /long ton and shredded scrap prices have come down by approximately $5 to $10 /long ton across the board.
In January, US scrap prices registered a historical high of approximately $420 /long ton; however, some of the irrational exuberance has since subsided and the real balance of demand and supply has started to reign. The market has now begun to correct itself and scrap prices have come down slightly for February.
Another reason scrap prices have come down is that domestic mills now have adequate inventories. Mills purchased a large amount of scrap tonnage in the previous months and have rapidly built up their inventories. Though scrap demand is still strong, especially from the export market, and supply continues to be tight, mills have enough supply for their immediate needs and are not ready to purchase more at such high costs.
Current Midwest busheling scrap prices are in the range of $395 /long ton to $405 /long ton, and shredded scrap is sold for $380 /long ton to $390/long ton, while HMS I ranges from $325 /long ton to $335 /long ton.
In March, it is expected that domestic scrap prices will stay more or less the same with a possibility of just a slight drop. The price is not expected to climb significantly until domestic mills' inventories return to low levels.
For the export market, SteelOrbis has learned that a Turkish mill has concluded a scrap booking ex-US for late March shipment. The cargo is composed of 19,000 mt of HMS I/II 80:20 scrap booked at $437 /mt CIF Marmara, 17,000 mt of shredded scrap booked at $442 /mt CIF Marmara, and 4,000 mt of P&S scrap booked at $447 /mt CIF Marmara. Prices fell approximately $20 /mt from the previous month, which is mostly attributable to the fall of the ocean freight rates. Still the East Coast exporters are getting better bucks for the scrap and demand for export remains high.
Turning to the West Coast, most exports from this region are taking place by container. However, exporters say most of the hidden costs of container shipments are now being realized. Scrap cargoes are damaging the containers and subsequently container rates for scrap are going up as well. In the meantime, bulk rates have softened some, yet are reportedly on their way up again. Better availability of vessels and better bulk rates may allow the bulk shipments to return to West Coast export yards.
The most recent USITC data available show that during the month of November 2007, the top recipients of shredded scrap from the US were: Turkey at 138,000 mt, India at 86,000 mt, Mexico at 73,000 mt, Thailand at 69,000 mt, and Taiwan at 54,000 mt. South Korea, Malaysia, Indonesia and Egypt also imported some tonnage of shredded scrap from the US in November.
The top recipients of HMS I grade scrap from the US in November 2007 were: Turkey at 181,000 mt, South Korea at 56,000 mt, Taiwan at 30,000 mt, Malaysia at 25,000 mt, and Egypt at 20,000 mt. Some other countries which imported HMS I grade scrap from the US in November include Thailand and Mexico.
The total amount of ferrous scrap exports from the US in November 2007 was 1,093,000 mt, 174,000 mt more than the amount exported in October.