With the tightening scrap supply and increasing scrap demand from both the domestic and export markets, US scrap prices are expected to go up by approximately $10 to 20 /long ton ($9.84 to $19.68 /mt) in September.
Domestic scrap supplies are still low in the market, and increased scrap purchasing activity is expected in the near-term, which should lead to further tightening of the domestic scrap market is next month. As several US blast furnaces will resume operations shortly, including ArcelorMittal Cleveland in mid-September and ArcelorMittal Indiana Harbor in early October as well as US Steel’s rumored preparation to restart its Great Lakes Works furnace in Ecorse, Michigan, more scrap inventory replenishment will be seen in the market. Market sources tell SteelOrbis that the earlier inventory de-stocking activity has drawn US scrap inventories too low and now an upward correction is taking place. Steel product inventories among service centers and consumers are also very low, and this is leading to re-stocking on the finished product side as well, creating more demand for steel and hence more demand for scrap.
Meanwhile, increasing export scrap sales activity, particularly to the Far East, has been observed on the East Coast and Gulf Coast, as there is limited scrap supply left on the West Coast. Ex-US export scrap prices continue to trend upward as Asian scrap demand continues to be decently strong.
Due to the continued modest demand improvements on both the domestic and export side, on the whole, US domestic scrap prices are projected to rise by $10 to 20 /lt ($9.84 to $19.68 /mt) in September.
In the beginning of August, domestic busheling prices on the US East Coast were in the range of $315 to $325 /lt ($310 to $320/mt), shredded scrap prices stood between $270 to $280 /lt ($266 to $276/mt); and HMS I prices were at a level of $240 to $250 /lt ($236 to $246/mt).
The latest USITC data shows that the total amount of ferrous scrap exports from the US in June 2009 was 1,966,000 mt, representing an increase of 249,000 mt when compared to the figure of 1,717,000 mt in May 2009. This figure also reflected an increase of 116,000 when compared to the figure of 1,850,000 mt in June 2008. The June 2009 figures represent the best month for US scrap exports so far this year.
The main recipients of shredded scrap from the US in June were: China, at 231,000mt; Turkey, at 165,000 mt; India, at 161,000 mt; South Korea, at 112,000 mt; Vietnam and Thailand, at 43,000 mt each; and Malaysia, at 42,000 mt. Countries that imported smaller amounts of shredded scrap from the US during the month include Taiwan, Mexico and Egypt.
For HMS I grade scrap, the top recipients of US exports in June 2009 were: Turkey, at 167,000 mt; South Korea, at 113,000 mt; Malaysia, at 77,000 mt; China, at 73,000 mt; Taiwan, at 54,000 mt; and India, at 52,000 mt. Vietnam, Mexico, Spain and Egypt also imported some tonnage of HMS I grade scrap from the US during the period.