With slow scrap purchasing activity in both the domestic and export market, US scrap prices are likely to come down in October.
Domestic mills are not buying a lot of scrap so far in September due to the sluggish US long products market. Lack of orders booked on the wire rod, rebar and flat rolled market prevents domestic mills from purchasing scrap aggressively. It is heard that some domestic scrap transactions are concluded lower than the early September prices already, so mills are holding back and waiting for the possible price decrease next month.
In addition to the slow domestic scrap market, the export scrap market has been quiet for the first half of September as well. Turkey, one of the leading US scrap importers, has delayed their scrap purchase due to low finished steel demand in the local market. Although some market insiders anticipate Turkish mills will return to purchase October scrap shipments soon, Turkish steel producers are still hoping to see the improvement on their local finished steel market before booking any scrap cargoes.
Therefore, without the support from both the domestic and export scrap market, market sources expect US scrap prices to decrease about $10 to $20/long ton ($9.84 to $19.68/mt) in October, though scrap supply is expected to remain tight.
Early September prices on the East Coast for busheling scrap were at $445 to $455/lt ($437.97 to $447.81/mt), shredded scrap were at $375 to $385/lt ($369.08 to $378.92/mt) and HMS I prices were at $350 to $360/lt ($344.47 to $354.31/mt).
The lastest USITC data show that the total amount of ferrous scrap exports from the US in July was 1,297,000 mt, reflecting a decrease of 50,000 mt month-over-month and an increase of 21,000 mt year-over-year.
The main recipients of shredded scrap form the US in July were: China, at 157,000 mt; Turkey, at 85,000 mt; Taiwan, at 62,000 mt; Brazil, at 60,000 mt; Thailand, at 62,000 mt; South Korea, at 32,000 mt; Vietnam and Peru, at 28,000 mt each; and Canada, at 21,000 mt. Countries that imported smaller amounts of shredded scrap from US during the month include Japan, Malaysia and India.
For HMS I grade scrap, the top recipients of US exports in July were: Turkey, at 182,000 mt; Taiwan, at 83,000 mt; South Korea, at 50,000 mt; India, at 23,000 mt; Vietnam, at 20,000 mt; China, at 19,000 mt; and Japan, at 18,000 mt. Malaysia, Canada and Pakistan also imported some tonnages of HMS I grade scrap from the US during the month as well.