The US domestic scrap market has seen some improvement this month, but the gap between domestic and export demand remains large. However, it is expected that the demand for US scrap from the international market will continue to remain moderately strong through the near future, and this should continue to provide at least some boost to the domestic market.
Demand out of Asia is holding up despite China being content with sitting on the sidelines. Current rates out of the West Coast to Far Eastern and South Asian ports have been settling in at about $200/mt FOB. On a CFR basis, most current US scrap export offers for HMS I/II80:20 to the main Asian destinations are approximately as follows: $245/mt CFR Korea, $265/mt CFR Vietnam, $260/mt CFR Shanghai, $240/mt CFR Taiwan, $290/mt CFR Bangladesh, and $270/mt CFR India. There is no major shift in demand from these regions expected to occur in the coming weeks.
Meanwhile, with the Turkish finished product market holding steady, it is expected that ex-US scrap demand out of the East Coast will remain strong through June. Current rates to Turkey out of the US East Coast are heard at $265/mt CFR for HMS I/II 80:20, $270/mt CFR for shredded, and $275/mt CFR for P&S.
On the other hand, the US domestic market has been in troubled waters for some time now with little to no demand coming from domestic steelmakers. The past week has seen some relief as there has been an up-tick in purchases; however, this is viewed by some industry sources as "emergency buying" and may not be an actual indicator of a change in the general market trend. Still, it is predicted that the US domestic scrap market will see a small increase going into the June/July months with a spike in August/September.
Regarding the future of scrap exports, one interesting shift being discussed by some in the market is the role that containers will play in the future of scrap exporting. Moving forward, producers will be looking for methods to better manage their cash flows and inventory, and, as one scrap exporter remarked to SteelOrbis, "what better way to do that then the use of containerized shipments?" Currently, the Asian mills have been the only major buyers in the market to utilize containers as a regular method of shipment for their scrap purchases. However, as other markets look for ways to better control their inventory flow, we may see more and more containers going to destinations typically not known for this.
The Turkish market in particular is one that may benefit from the conversion to a containerized distribution cycle. In the past, the Turkish market has kept its distance from containers due to the shear amount of tons being booked and the lack of effective and safe container unloading methods. However, with the advances made in the technology used to unload containerized cargoes, containers are looking like a more viable alternative nowadays. One big problem still remains, though: according to an industry source, the US East Coast ports currently do not have the capacity to handle the number of containers needed to fill the tonnage "currently" booked on a regular basis to Turkey. This, with the possibility of limited container availability makes some skeptical of the possibility of an increase in containerized scrap cargoes.