Speaking to various scrap producers on the sidelines of the ISRI conference in Vegas this week, SteelOrbis learned that ferrous scrap prices are being affected by the Section 232 tariffs and recent retaliatory actions by the Chinese government. While Section 232 implemented a 25 percent import tariff on steel products, raw materials such as ferrous scrap and pig iron at first appeared to be spared. But from various discussions with domestic and export players throughout the week, sources say they are “seeing the effect and prices have softened due to the uncertainty that was injected in the market as of March 1.”
One large US East coast exporter stated, “Pre-March, the confidence in the US market was high, but tariffs shook things up and we are left trying to sort through the direct and trickling unintended consequences.”
On the US West coast, a scrap exporter informed SteelOrbis that smaller urban scrappers are feeling the pressure with inventory building up and are having to sell ferrous scrap loads to larger export entities such as his at “lower prices than the previous month.” He added, “It is giving our firm the opportunity to purchase excellent inventories at lower than expected prices as urban scrap yards have limited space, so no complaints, but the statement that Section 232 is not affecting ferrous scrap activity and pricing because it is excluded from both the Section 232 and Chinese environmental and retaliatory policies is naïve.”
Several others voiced the concern that Section 232 injected uncertainty into the markets at a wider level at a time when positive momentum was building. A source stated, “As the exclusions have been announced, some uncertainty has decreased, but if almost 20 percent of total imports is left to discuss, the uncertainty is not 20 percent, the uncertainty comes from the policies and prices from the producer of 50 percent of what happens in the global market, namely, China.”
SteelOrbis has confirmed the import of around 300,000-350,000 mt of scrap coming in May and June. Sources report the loads are mostly comprised of busheling and shredded scrap but some cut scrap grades such as P&S and HMS I are included. On the side of export, some sources report “up to 500,000 mt of scrap may stay at home.”
An East coast source stated, “So many factors are involved at the moment including the AD/CVD final determinations, May 1 theoretical expiration on exemptions, but also the fact that some finished buys are based on a scrap grade pricing scheme. I am voting for some pressure but mostly sideways for May.”