The US: Ferrous scrap export prices increase from East Coast amid recent Turkiye deals

US ferrous scrap export prices have been steadily rising on the East Coast, driven by increased demand from Turkiye and higher freight costs, as per recent trade deals that happened from the US to Turkish mills.

These deals have revised the current workable levels higher by $4/tonne (t) from the previous East Coast cargo sold in mid-June ahead of Eid.

Brent oil prices: Scrap transactions have occurred in a slightly higher freight rate environment due to rising oil prices. Brent crude oil futures have increased by approximately 8-8.5% since the beginning of the year.

US scrap vessels booked by Turkiye: Five to six US East Coast bulk scrap cargoes have been booked in June so far as compared to 10-12 in the previous month.

Sources indicated that another East Coast cargo to Turkiye might be booked later this week. The target price for the HMS (80:20) is $390-392/t CFR, but Turkish buyers are offering around $382-384/t CFR. The transaction is expected to close between $385-390/t, likely at the upper end of that range due to current market conditions.

Recent billet imports from China and Indonesia have created uncertainty in the scrap booking environment for July, despite 8-10 bulk vessels still needing to be booked by Turkiye.

Bulk inquires from Bangladesh: From the US West Coast, a bulk scrap cargo was heard to be booked for Bangladesh at $400/t for HMS and $405/t for shredded, estimated to be for August shipment. although prices are supportive for buyers due to bearish market sentiments and a lack of interest in containerised scrap amid soaring freight rates.

As per market insiders, bulk inquiries from Bangladesh are there from major steel mills of Bangladesh owing to the lesser availability of containers as of now.

Assessment trend

BigMint's assessment for HMS(80:20), FOB East Coast increased by $5/t w-o-w to $364/t on Friday, from $359/t a week ago.

BigMint's assessment for shredded, FOB East Coast increased by $5/t w-o-w to $384/t on Friday, from $379/t a week ago.

Auto sales

New vehicle sales in the US are expected to decline in June due to the CDK cyber attack that has disrupted dealerships nationwide, according to a joint report by J.D. Power and GlobalData.

The CDK outage has affected over 15,000 retail locations, forcing some dealers to revert to manual paperwork. Analysts are closely monitoring sales numbers to assess the impact.

Total new vehicle sales for June 2024 are projected to be in a range of 1,273,600-1,336,800 units, a 2.6-7.2% y-o-y decrease respectively. Average transaction prices are expected to be $44,857 per unit, down $1,372 or 3% from a year ago. Incentive spending per vehicle has increased by 51.2% to $2,625. Total retailer profit per unit, including gross vehicle and finance and insurance income, is expected to be $2,407 in 2024, a 32.3% drop from June 2023.

Outlook: US participants expressed a bearish near-term price outlook due to weak market fundamentals with limited demand for Turkish-finished steel. This has dampened demand for ferrous scrap imports. US ferrous scrap prices face uncertainty for July loading volumes, with further weakness in the domestic flat steel market posing a significant challenge to any potential rebound from the June scrap price downturn. Some Turkish market participants suggested that certain scrap grades in the US could soften by $15-20/t domestically.