The sluggish market conditions for US scrap seem to have passed, with prices climbing approximately $10 to $15/ long ton in the beginning of August due to the high demand and the shortage of scrap availability in the market.
While the scrap market has been slow for the past few months, showing typical summertime softness, demand is currently getting stronger and supplies are tight. Domestic steel mills are getting back to production and starting to replenish their inventories, which increases scrap buying activity. There is also a lack of scrap in the global markets, partly due to the slow scrap collection this summer. For these reasons, it is expected that scrap prices will go up another $10 to $20 /long ton in September and continue to trend up slightly for the next three months.
After No. 1 factory bundles went up $10-15 /long ton in the beginning of August, factory bundles now range from $305 to $315 /long ton in the Midwest region. Domestic busheling and shredded scrap also rose $10 to $15 /long ton, with current Midwest busheling scrap going for $310 to $315 /long ton, and shredded scrap going for $275-280 /long ton. HMS I ranges from $255-260 /long ton, an increase of approximately $10/ long ton since last month.
CFR-based export scrap prices have gone up approximately $20 /mt since last month, mainly due to the high freight rates, which are around $65 to $70 /mt at this time for shipments bound from the East Coast to Turkey. The soaring freight rates are caused by the shortage of ship availability since, in addition to the strong raw materials trade, many ships are being used to transport products for other markets.
Turkish mills have concluded quite a few bookings for September shipments in the last few weeks. Approximate prices for shredded scrap ex-US East Coast to Turkey were $350 /mt CFR for shredded scrap and $345 /mt CFR for HMS I/II 80:20 delivered to Turkish ports.
In June, Turkey, the leading US scrap importer, reduced their import buying of shredded scrap significantly. The most recent USITC data available show that during the month of June 2007, the top recipients of shredded scrap from the US were: Egypt, at 70,000 mt; Turkey, at 65,000 mt; and Mexico, at 46,000 mt. Colombia, India, Thailand, South Korea, Greece, Malaysia and Taiwan also imported some tonnage of shredded scrap from the US in June.
The top importers of HMS 1 grade scrap from the US in June 2007 were: Turkey, at 134,000 mt; Egypt, at 46,000 mt and South Korea, at 26,000 mt. Some other countries which imported HMS 1 grade scrap from the US in June include: Taiwan, Indonesia, Malaysia and Thailand.
The total amount of ferrous scrap exports from the US in June, 2007 totaled 940,000 mt - 9,000 mt less than the amount exported in May. Year-to-date (January to June 2007) the total amount of ferrous scrap exports is 5,330,000 mt - an increase of 23.5 percent when compared to the figure of 4,318,000 mt for the corresponding period of 2006.