Although US scrap prices decreased in November, the market has turned around, with scrap prices strengthening in December.
Factory bundles have gone up approximately $15 /long ton since last month, and scrap prices have followed, increasing significantly, by approximately $35 to $40 /long ton so far in December.
Scrap prices have increased due to the strong demand from both the domestic and the export markets, each of which has tight supplies. And with the cold winter weather approaching, scrap collection will be more difficult. There is a current lack of scrap availability in the market, which is making it harder for domestic steel mills to procure adequate supplies of scrap tonnage to get through the winter months.
Steel mills normally lower their inventories in the short month of December, though this year they are doing just the opposite. One reason is that the prices of scrap substitutes such as pig iron and DRI are going up significantly. The increase in iron ore prices expected next year is another factor causing mills to purchase scrap tonnage now, thus driving up the prices. At the same time, the weak US dollar and strong demand from overseas are also driving up scrap export activity and prices.
Currently, Midwest busheling scrap is going for $325 to $335 /long ton, and shredded scrap is sold for $305 to $315 /long ton, while HMS I ranges from $270 to $280 /long ton. It is expected that scrap prices will rise slightly, by at least another $10 /long ton, in January.
As for exports, SteelOrbis has been informed that a Turkish mill has concluded a booking of 40,000 mt of HMS I/II 80:20 scrap ex-US at $365/mt CIF Nemrut. The seller has the option of including 8,000 mt of shredded scrap as part of the cargo in question. Since this booking Turkey has concluded higher priced purchases from continental Europe and US export prices are also expected to follow.
As for pig iron imports, year to date (January to September 2007) statistics show that the top countries from which the US imported pig iron were: Brazil, at 2,573,000 mt; Russia, at 831,000 mt; Ukraine, at 219,000 mt; Canada, at 86,000 mt; and South Africa, at 79,000 mt. The figures show a slight decrease compared to 2006.