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US ferrous scrap export index drops $11/t w-o-w amid weak Turkish demand, lower European offers

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Melting Scrap

BigMint Bureau

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22 Nov 2024, 19:04 IST

US ferrous scrap export index drops $11/t w-o-w amid weak Turkish demand, lower European offers

Subdued steel demand limits US export trade

Cheaper Chinese billets pose stiff competition

The US ferrous scrap export index declined by $11/tonne (t) w-o-w. Major buyers such as Turkiye, Bangladesh, and India showed weak interest in US-origin bulk scrap due to sluggish steel markets. To illustrate, weak demand in the Turkish rebar market caused mills to reduce domestic scrap procurement, putting pressure on scrap prices.

Earlier this week, European suppliers resisted offers below $350/t CFR Turkiye due to high dock prices and unfavourable exchange rates. However, as bids from Turkish mills stayed low, European suppliers were forced to bring down their offers to secure deals. This made European-origin scrap more attractive than US-sourced material. However, a handful of Turkish steel producers preferred US scrap, particularly from the East Coast, over European-origin material.

With Turkish rebar prices dropping and European scrap becoming more competitive, US suppliers were compelled to reduce their deep-sea scrap export offers.

FOB assessments

BigMint's assessment for HMS (80:20) bulk FOB US East Coast decreased by $11/t w-o-w to $321/t on Friday.

BigMint's assessment for shredded bulk FOB East Coast also declined by $11/t w-o-w to $341/t on Friday.

CFR assessments

Weekly assessment for US-origin HMS (80:20) bulk scrap was at $345/t CFR Turkiye, a drop of $11/t w-o-w.

Weekly assessment for deep-sea bulk US cargoes of HMS (80:20) CFR Vietnam stood at $363/t, down by $1/t w-o-w.

Weekly assessment for US-origin HMS (80:20) bulk was at $375/t CFR Chattogram, down by $5/t w-o-w.

Buyer-side market

Turkiye: Turkish imported scrap prices for US-origin scrap remained under pressure and fell to $340-345/t CFR, their lowest level this year, last seen in November 2022. The decline came in the wake of weaker domestic steel demand and reduced rebar exports.

Mills are buying less scrap due to low steel demand. Izmir Demir Celik has paused one of its electric arc furnaces (EAFs) for maintenance until mid-to-late December, pressuring the market and pushing prices down.

Meanwhile, US suppliers sold HMS (80:20) to Turkiye for $350-354/t CFR compared to around $356/t a week earlier, in line with the market decline.

Additionally, an influx of cheaper Chinese billets, driven by a weak property stimulus and disappointing tax cuts on realty purchases in China, led to a reduction in billet offers to $450/t FOB, or about $485/t CFR Turkiye. These prices are similar to US ferrous scrap, which is at around $345-350/t CFR.

Bangladesh: Demand for US-origin scrap in Bangladesh has been slow this week, with few deals taking place. Imported scrap prices dropped by $10/t w-o-w overall, due to letter of credit (LC) issues, a weakening currency, and high freight costs.

Additionally, weak domestic steel demand and low bid expectations from buyers in response to higher offers are contributing to the market slowdown.

According to a market participant, "Bangladesh's steel demand has dropped to 50-60% of its H1CY'24 levels. With new infrastructure projects still awaiting approval, the market is expected to remain sluggish in the coming weeks."

Reports in the mid-week indicated a bulk booking from the US West Coast, with a Bangladeshi mill reportedly purchasing HMS (80:20) at $370/t and shredded at $375/t CFR Chittagong, pending confirmation at the time of publication.

Outlook

Looking ahead, scrap prices will remain under pressure, given that Turkiye, a major buyer of US scrap, is facing weak steel sales and declining long steel and billet prices. Market participants do not expect a short-term recovery until both local and export demand improves. Suppliers, however, are hoping for a rebound during the restocking season.

Meanwhile, President-elect Donald Trump's proposed tariffs on US imports - 10-20% on overseas steel imports across the world and 60% on Chinese steel - could drive up foreign steel costs. The aim is to curb cheap imports and protect US producers, potentially leading mills to rely more on domestic scrap, which could reduce scrap availability for export.