Lack of scrap availability in the domestic market is expected to drive the US scrap prices to rise again next month.
Although Turkey, one of the leading US scrap importers, is having a month-long Ramadan holiday and their purchasing activity has since slowed, scrap export prices are still hovering at high levels of $390/mt CFR for the time being; that supports the strength of the domestic scrap prices.
In addition to the high scrap export prices, the scrap supply remains short in the market, and domestic mills are unable to obtain the sufficient tonnage they need. Moreover, the flat rolled market is slow currently, so the flat rolled mills are not purchasing scrap aggressively at the moment; if they come back to acquire scrap in the market, industry sources believe the domestic scrap supply situation would be poorer. Therefore, it is expected that the US scrap prices will go up another $20 to $40/lt ($19.68 to $39.37/mt) in September.
On the East Coast, busheling scrap prices are in the level of $420 to $430/lt ($413.37 to $423.21/mt), shredded scrap prices are between $340 and $350/lt ($334.63 to $344.47/mt) and HMS I prices range at $330 to $340/lt ($324.79 to $334.63/mt). It is heard that some shredded scrap has been offering around $375/lt ($369.08/mt) already, which is an increase of approximately $20/lt ($19.68/mt) from the early August price.
The latest USITC data show that the total amount of ferrous scrap exports from the US in June was 1,347,000 mt, reflecting a decrease of 194,000 mt month-over-month and a drop of 619,000 mt year-over-year.
Due to lack of finished products demand in Turkey in late spring, Turkish producers were postponing their scrap purchases; as a result, Far East countries replaced Turkey as the primary US scrap importers in June. The main recipients of shredded scrap from the US in June were: China, at 211,000 mt; Malaysia, at 91,000 mt; Turkey, at 75,000 mt; South Korea, at 71,000 mt; Taiwan, at 44,000 mt; India, at 35,000 mt; Mexico, at 32,000 mt; as well as Italy and Peru, at 31,000 mt each. Countries that imported smaller amounts of shredded scrap from US during the month include Vietnam, Canada, Egypt, Thailand and Pakistan.
For HMS I grade scrap, the top recipients of US exports in June were: South Korea, at 95,000 mt; Taiwan, at 71,000 mt; Malaysia, at 65,000 mt; Turkey, at 60,000 mt; China, at 40,000 mt; and India, at 23,000 mt. Indonesia, Egypt, Canada, Mexico and Pakistan also imported some tonnages of HMS I grade scrap from the US during the month as well.
As for pig iron, international suppliers from Brazil, Russia and Ukraine are offering at $450 to $460/mt CNF Nola. Prices have increased about $20/mt from a month ago due to tight supply, though there is hardly any transaction to be seen in the US market.
