As the cold weather is coming and the scrap supply continues to tighten, US scrap demand is increasing and domestic scrap prices are expected to go up further in January.
When compared to early November prices, busheling scrap prices have climbed approximately $80/long ton ($78.74/mt), while shredded scrap prices have increased $60/lt ($59.05/mt) and HMS I prices have gone up $70/lt ($68.89/mt). Currently, US East Coast’s busheling scrap prices are at the level of $335 to $345 /lt ($329 to $340 /mt), shredded scrap prices range from $290 to 300 /lt ($285 to $295 /mt), and HMS I prices stand at $280 to $290 /lt ($276 to $285 /mt).
The coming winter weather will make the transportation and scrap collection activity difficult, and this will create a very slow scrap flow. Some domestic mills resumed scrap purchasing in November and December to bolster their low scrap inventories, while other domestic mills, are hunkering down through year end and are expected to come back to buy in January in order to continue operating through the first quarter. In addition with slowly improving steel demand in certain markets, such as flat rolled, these factors make it very likely that the US scrap market will see further price increases in January.
The general feeling in the market is that domestic prices will increase by $20 to $30/lt ($19.68 to $29.53/mt), while some more optimistic market insiders think that the price increase could be as much as $70/lt ($68.89/mt) next month as scrap supply is not expected to see any significant improvement until the weather gets warmer in March or April.
The latest USITC data shows that the total amount of ferrous scrap exports from the US in October 2009 was 1,129,000 mt, representing a decrease of 476,000 mt when compared to the figure of 1,605,000 mt in September.
The main recipients of shredded scrap from the US in October were: Turkey, at 148,000 mt; Taiwan, at 62,000 mt; South Korea, at 54,000 mt; Indonesia and Malaysia, at 40,000 mt each; Mexico, at 39,000 mt; Thailand, at 26,000 mt; and India, at 22,000 mt. Countries that imported smaller amounts of shredded scrap from the US during the month include Vietnam, China, Pakistan, Greece and Canada.
For HMS I grade scrap, the top recipients of US exports in October were: Taiwan, at 89,000 mt; South Korea, at 87,000 mt; Turkey, at 59,000 mt; Malaysia, at 40,000 mt; Indonesia, at 37,000 mt; and Thailand, at 23,000 mt. China, India, Vietnam, Mexico and Canada also imported some tonnage of HMS I grade scrap from the US during the period.