With a combination of weak
scrap demand, softening finished product sales and a stalling economy, US
scrap prices continue to trend downward and are expected to drop approximately $10 to $20 /long ton (lt) in April, depending on the region.
Scrap supply is low in the market as there is less
scrap being generated. However, the warmer spring weather may improve the supply situation to some degree in the coming months, while domestic
scrap demand will likely remain weak.
There are a very limited number of
scrap transactions being concluded from US mills, and only in small quantities. The majority of the domestic mills are not purchasing
scrap tonnage and are operating at reduced capacity. Some mills that still have
scrap inventories but aren't operating are transferring
scrap tonnage to their other plants in operation, while some mills are not melting
scrap at all.
In addition to the weak
scrap consumption, the continuous softening finished product market and deepening economic crisis has also caused steel industry players to retreat from the market. Therefore, in April, market sources expect that the domestic
scrap prices will decrease approximately $10 to $20 /lt, depending on region. On the US East Coast, it is expected that the April busheling (domestic)
scrap prices will range from $180 to $190 /lt. Shredded
scrap will be at the level of $170 to $180 /lt, and HMS I prices will range between $155 and $165 /lt. East Coast prices tend to be higher than in other regions of the US due to the export business.
Meanwhile, the export US
scrap market recently showed a slight upward trend, which, if sustained, may prevent further price slippage on the domestic side beyond April. Turkish mills have returned to purchase
scrap from the US East Coast over the past two weeks in order to replenish their low
scrap inventories. SteelOrbis was informed last week that Turkish mills concluded an ex-US HMS I/II 80:20
scrap deal at $230/mt CFR, shredded
scrap at $235/mt CFR, and P&S
scrap at $240/mt CFR. The US export price for HMS I/II 80:20 has increased approximately $10 /mt since early March.
As for
pig iron, one raw materials trader described the market as “extremely weak.” There is hardly any
pig iron business in the US, as mills are still slowly consuming the expensive
pig iron tonnages that they bought several months ago.
As the overall
pig iron demand is very poor, more than 50 percent of the
pig iron mills are closed in
Brazil.
Pig iron prices have gone down around $50 /mt in two months to the current level of $210 /mt FOB Southern
Brazil. The US
pig iron market will likely turn around when the US
scrap market picks up, which is not expected to happen before the third quarter of 2009.
Statistics show that the total amount of
pig iron imported into the US in 2008 was 4,976,867 mt, which represents a decrease of 239,905 mt when compared to the figure of 5,216,772 mt in the corresponding period of 2007. The top
pig iron exporters to the US during the period were:
Brazil, at 3,606,951 mt;
Russia, at 711,278 mt;
Ukraine, at 309,526 mt; and
Canada, at 181,626 mt. The US also imported some tonnage of
pig iron from South
Africa,
Sweden,
Venezuela and
Trinidad & Tobago during the year of 2008.