The US: Ferrous scrap export index drops $4/t w-o-w amid weaker dollar, economic uncertainty

The US ferrous scrap export index continued its downtrend as interest from Bangladeshi mills waned following a surge in purchasing activity earlier this year. The earlier increase in shipments to Bangladesh was likely driven by preparations for the monsoon season and concerns over potential political unrest. However, this heightened activity now appeared to be slowing as mills adjust to current market conditions.

The US ferrous scrap export market remained subdued amid recent geopolitical and economic uncertainties. The global stock market sell-off, which followed a three-week decline, weakened the US dollar, negatively impacting scrap export offers.

On the US West Coast, export activity has been minimal since the third week of July, primarily due to limited local steel demand caused by severe rainfall.

Concerns are growing over the impact of cheap billets from China and Russia on scrap exports to Turkiye. One east coast exporter noted a shift in sales toward the Ohio Valley, signalling potential issues for domestic scrap supply.

Turkish mills have expressed caution regarding US scrap, showing a propensity to avoid paying above $380/t CFR. Expectations are that sellers may need to reduce prices further. There is a belief that recyclers might be holding excess stock due to weak demand and may need to sell at lower margins or even at a loss. With little expectation for a near-term market recovery, sellers are likely to offload inventory quickly to minimise additional costs.

In recent deals, a bulk vessel from the US was booked, comprising a total of 26,000 tonnes (t) of mixed scrap, including HMS (90:10) at $383/t and PNS at $398/t CFR Turkiye followed by another US bulk vessel with HMS (90:10) at $381/t and Shred/PNS at $396/t CFR.

Import prices for HMS (80:20) have fallen to $380-382/t CFR due to lower-priced EU-origin deals, adding pressure to the domestic market. A recent European sale of HMS (80:20) at $376/t CFR, along with shredded and bonus-grade material at $393/t CFR, translated into $381/t CFR for US-origin materials--a $9/t drop from recent US East Coast prices.

The Turkish lira, which peaked the lowest level at 33.54 to the dollar following favourable inflation data, has since slightly weakened. This weaker lira may reduce Turkish steel demand by raising import costs.

Assessments:

• BigMint's assessment for HMS (80:20) bulk FOB East Coast decreased by $4/t w-o-w to $353/t on Friday, down from $357/t a week ago.
  
  
• BigMint's assessment for shredded bulk FOB East Coast also decreased by $4/t w-o-w to $373/t on Friday, down from $377/t a week ago.
  
  

Domestic market:

In the domestic market, US ferrous scrap dealers are encountering resistance in their efforts to increase August prices for prime and shredded scrap in parts of the Midwest. Dealers are targeting price hikes of $15-$20/t for August deliveries. Shredded scrap prices remained steady at $375/t delivered Midwest and $385/t delivered Southeast.

A Southeast mini-mill announced bids for obsolete scrap grades that remained unchanged from July, with prime scrap prices still to be determined by the market. Dealers in the Midwest were aiming for a $15-20/t increase for busheling and a $10-12/t increase for shredded scrap, though transactions at these higher prices had not yet been confirmed.

Outlook:

The US ferrous scrap export market continues to face challenges amid broader economic uncertainties, geopolitical factors, and fluctuating global scrap prices. Dealers and exporters suggest a range-bound outlook as market conditions, fluctuating currency, and subdued buyer demand will likely influence near-term pricing.