Low
scrap inventories and demand from overseas are pushing US
scrap prices up.
Most US
scrap yard inventories are low for the time being. Insiders predict that the domestic pricing trend is headed up in the short term and will go up further next month and possibly into March.
Despite all the steel capacity cuts, domestic
scrap demand is decent, but not particularly strong. Specifically,
scrap demand from hot rolled coil producers has been down, as the mills are struggling to maintain
HRC prices above $500 /nt. Therefore, melting has been limited, so not much busheling
scrap has been needed. However, the deficit generated by busheling
scrap consumption is offset by the exports. The US has been exporting heavily, taking advantage of the weak US dollar and filling in the gaps left by typical
scrap exporters like
Russia.
Since the beginning of the year, we have seen domestic
scrap prices climb up. First, the auto bundle prices increased at approximately $30 /long ton. This was a good indicator that
scrap prices would rise in turn. Several days later, busheling
scrap increased an average of $30 /long ton, and shredded
scrap increased by an average of $25 /long ton, while HMS I and II went up at an average of $25 /long ton. Busheling prices now range from $260 -$270 /long ton, while shredded goes for $250 - $260 /long ton.
As for exports, overseas demand is strong, and this is also forcing the domestic market prices higher. In addition,
freight rates are increasing, resulting in a net increase in the delivered price.
The strength of Russian
scrap demand is another factor making the US export market stronger. As Russian demand for domestic
scrap continuously increases, it is exporting less and less
scrap. Therefore, countries that used to purchase
scrap from
Russia are now turning to the US for imports.
Turkey, which consumes a lot of
scrap at minimills, mostly for rebars and
wire rods, imports the most from the US East Coast. For the US West Coast,
Korea,
Japan and
China have been the major buyers.
Pricing for executed contracts of US
scrap to
Turkey has increased from last month. SteelOrbis is informed that a Turkish mill has concluded a booking of a single cargo of
scrap ex-US at $304 /mt CIF Iskenderun level for February shipment. The cargo is composed of 18,000 mt of HMS I/II 80:20
scrap and 7,000 mt of shredded
scrap. Other
scrap bookings for different Turkish destinations have been fixed over $300 /mt and the prices have been going up daily.
The most recent USITC data available shows that during the month of November, 2006, the top recipients of shredded
scrap from the US were:
Turkey at 110,000 mt,
Mexico at 73,000 mt,
Taiwan at 34,000 mt and
Greece at 33,000 mt. Some other major importers included
Egypt and
Malaysia, while
Korea also imports some.
Egypt, which did not import any shredded
scrap tonnage from the US in October, imported 31,000 mt in November. However,
Peru and
Indonesia, which imported 32,000 mt and 31,000 mt respectively in October, did not import any shredded
scrap tonnage from the US in November.
The top importers of HMS 1 grade
scrap from the US in November, 2006 were:
Turkey at 211,000 mt,
Malaysia at 43,000 mt, and
Korea at 25,000 mt.
Italy, which did not import any HMS 1 grade
scrap tonnage from the US in October, imported 22,000 mt in November. Some other countries that imported HMS 1 grade
scrap from the US in November include:
Greece,
China,
Thailand,
Taiwan and
Egypt.
Turkey, which imported 123,000 mt HMS 1 grade
scrap from the US in October, saw a big jump in November.