According to sources, mills throughout East Asia including South Korea, Vietnam, Taiwan and Japan have been heard purchasing small batches of Chinese origin shredded scrap material. The small batches are being reviewed for quality but mill representatives are also reportedly making arrangements to visit source sites to assess quality, quantities available, and long term potential.
The recent deals for ex-Chinese shredded scrap have been heard at $250-260/mt CFR Taiwan. Sources from various Asian regions express perplexity at the low price at which shredded is being sold given the publicly understood Chinese domestic pricing plus the additional 40 percent scrap export tariff and VAT charges associated with such export transactions. A source suggested that possibly some of those requirements have been suspended temporarily given the shutdown of induction furnaces; the scrap is presently assumed by many in the industry as coming from the closure of those induction furnaces. Another source suggested that the low pricing is potentially only for the test volumes.
In the US West coast region, several low volume transactions were heard for HMS I/II 80:20 at $235-240/mt CFR Taiwan. Limited offers continue being heard for HMS I/II 80:20 at $235-245/mt CFR Taiwan. Sources note that offers are not being actively placed in the market as Asian mills are rumored to be assessing alternative sources of scrap prior to booking ex-US scrap material and $240/mt CFR Taiwan is the minimum exporters are seeking.
Lower bids on Japanese H2 scrap are placing pressure on the H2 market, which traditionally trades a few dollars above ex-US HMS I/II 80:20 scrap.
The US domestic scrap market settled at sideways and in some cases slightly up during the May buy-cycle compared to the April buy-cycle. Accordingly, US West coast exporters had large volume offers of up to $250/mt CFR Taiwan earlier in May despite smaller volume deals heard close to the $235/mt CFR Taiwan range. A source noted that additional market information from Japanese H2 and Chinese shredded scrap deals are expected prior to the US West coast scrap market tightening offers.