The US scrap market rallied until early this week on strong export demand. On the East coast, a flood of Turkish deals led the rally but was supported by buys from India, Bangladesh and Pakistan with demand that led to expectations of a HMS I/II 80:20 deal hitting $280/mt CFR this week. Yet, Turkish steelmakers reduced their appetite and made their most recent ex-US booking for HMS I/II 90:10 and shredded at $278.5/mt CFR average price which translates to approximately $274/mt for HMS I/II 80:20. Along with several recent lower priced transactions from the EU and Baltics, this latest ex-US transaction decreased Turkey’s scrap import prices.
On the West coast, demand was heard from Taiwan, Japan and even China. Chinese steelmakers were heard purchasing four ex-US scrap cargoes. Early in the week rumors were buzzing of ex-US West coast scrap deals of HMS I/II 80:20 as high as $250-255/mt CFR Taiwan, but with the decline in Chinese futures and other mixed signals in the Chinese market, scrap supply increased to Taiwan eroding $10-15/mt on ex-US scrap prices that are now being heard at $240-245/mt CFR.
Bids from Turkey have temporarily dropped but are expected to return next week. The East coast suppliers are pricing export scrap on tight supply and competition between the export market and the domestic needs in the December buy cycle. Exporters have had to substantially increase scrap prices at dock to attract supply for the last few weeks. Additionally, scrap yards are betting on the fact that as a result of the high coking coal costs not only will they have the usual December demand from clients, but BOF mills will increase their use of scrap in their production.
“I do not believe US steel prices will move down after this most recent global rally,” commented a scrap dealer in the Midwest. Another source close to SteelOrbis stated, “Despite raw material prices easing in China and some softening this week, with the US tight scrap supply, sufficient demand for scrap which could even increase, high coking coal prices, and increased pricing on alternative products, I can only see US scrap moving up at least $10/mt on heavy melt and $10-20/mt on shredded.”