As of mid-November, US scrap export activity has seen a dramatic increase over this month over last, as US ports on every coast have seen their major international customers back in the market with multiple bookings.
Turkish rebar producers were able to push through a price increase this month, which has allowed them the purchasing power to procure much-needed tons to continue production. As a result of the six cargos booked by Turkish mills within the past couple weeks, ex-US prices of HMS I/II 80:20 have sharply increased from $265/mt CFR a little over a week ago, to their current level of $290-$293/mt CFR.
Chinese scrap import activity also picked up significantly in mid-November with bookings of ex-US shredded material concluded mid-month reported at levels of $320/mt CFR, a $30/mt increase from earlier in the month. The same material is reportedly being offered at $340 to $350/mt CFR at present (however, there have been no bookings heard at this offer level yet). Since the mid-month Chinese bookings took place, however, it is thought that the Far East appetite for large scrap purchases has been sated for the time being, and that this may lead to a slowdown in bulk purchases over the next few weeks. However, according to some, smaller containerized bookings are still being concluded. Current container rates of ex-US material bound for Far Eastern ports have been reported at $300/mt CFR Taiwan for HMS I and at $280 to $285/mt CFR Korea for HMS I/II 80:20.
Industry sources are hesitant to forecast export activity past the end of the year; however, there is no overlooking the impact that the recent international buying pick-up has had on the US domestic position. Up until the recent increase in export activity, many US scrap suppliers were prepared to stay out of the market until January 2010. However, the lure of the increased demand and pricing on the international scene was too tempting to pass up.
Consequently, the pick-up in export bookings, along with the typical slowdown in winter collections, has led to a tightening of domestic supply. This has placed domestic mills in a tough place. Under normal circumstances, US domestic scrap buying activity slows down considerably over the holiday season, and most mills planned to follow this model and to resume buying in January. However, facing the possibility that material may not be available come January, in order to maintain current programs, domestic mills are considering a short-term buying program to secure some of their winter supplies before year-end.