US: Ferrous scrap export index inches down by $2/t; suppliers cautious on potential port strike

• HRC prices in US Midwest drop below $700/t
  
  
• US steel production remains largely stable
  
  

The US ferrous scrap export index witnessed a decline of $2/tonne (t) w-o-w, with limited inquiries from major buyers such as Turkiye and Bangladesh resulting in minimal price changes. A potential strike by the International Longshoremen's Association and the upcoming presidential election have also led to caution among market participants.

Potential US East Coast port strike looms

As the 1 October deadline for a potential strike by the International Longshoremen's Association approaches, US industries brace for significant disruptions at key East Coast ports. Such a strike could cause severe congestion and delays, affecting container availability and driving up costs.

A strike could cost the economy over $1 billion daily, stranding essential goods and heightening inflationary pressures. Retailers are shifting shipments to West Coast ports and prioritising high-value items while shipping lines prepare to impose surcharges, with long-term effects extending into 2025.

As per market reports, for domestic steelmakers, HRC prices in the US Midwest have dropped below $700/t. This decline is primarily due to dull demand and limited buying activity. Mills are struggling to maintain price increases, with expectations of stabilisation between $34-36/cwt. (In the US, 1 hundredweight (cwt) is equivalent to 100 pounds (about 45.36 kg). When prices are referenced as $34-36/cwt, it means $34-36 per hundred pounds of material.)

FOB price assessments

• BigMint's assessment for HMS (80:20) bulk FOB East Coast decreased by $2/t w-o-w to $341/t on Friday from $343/t a week ago.
  
  
• BigMint's assessment for shredded bulk FOB East Coast decreased by $2/t w-o-w to $361/t on Friday from $363/t a week ago.
  
  

US steel production stable

US steel production increased for the week ending 21 September 2024 to 1.707 million tonnes (mnt), with a capacity utilisation rate of 76.9%. This marks a 1% increase y-o-y, although it is down 2.4% w-o-w. Year-to-date production stands at 64.566 mnt, a 1.6% decline from last year. Region-wise production volumes were at 125,000 t in the Northeast, 583,000 t in the Great Lakes, 204,000 t in the Midwest, 742,000 t in the southern region, and 53,000 t in the west.

US Steel extends downtime of Kosice blast furnace

US Steel has extended the shutdown of one of its blast furnaces at the Kosice plant in Slovakia due to weak steel demand and low purchasing activity. The furnace, closed for maintenance in early August, is part of a facility with a total capacity of 4.5 mnt.

Additionally, despite the ongoing shutdown, US Steel anticipates higher EBITDA in Q3 due to positive trends in the carbon trading market, following a significant decline to $21 million in Q2.

Finished steel market remains stable

US domestic and imported rebar prices remained range-bound, with the domestic material at $730-740/t and imported at $700-710/t.

A reduction in borrowing costs and increasing stability in key sectors such as real estate, where rebar is majorly consumed, will curtail further fluctuations in prices.

Higher US interest rates had previously limited China's ability to ease its monetary policy without risking capital flight. However, the global shift in policy has opened the window for China to act, post which there is a better possibility that the country will continue to push its materials into other markets.

Buyers' market sentiments

Turkish buyers wary amid potential strike: Turkish interest in US-origin scrap remained mixed this week, even though the downward pressure from European oversupply has retreated. US-origin HMS (80:20) deals were noted at $368/t CFR, and recent transactions in East and West Marmara closed at $365/t-367/t. However, the market was cautious due to a potential US longshoremen's strike and a price gap, with EU-origin scrap trading at a discount.

The scrap-to-rebar spread stood at $220-222/t, with rebar prices at $590-595/t and US-origin HMS (80:20) at $368-370/t CFR.

Demand from Bangladesh falls: Bangladesh's demand for US-origin bulk scrap dropped, with bulk offers continuing to decline. US-origin HMS (80:20) bulk prices stood at $375/t CFR Chattogram, down by $3/t w-o-w. Major Chattogram-based mills that secure US-origin bulk scrap were out of the market due to ample inventory, which kept procurements slow for a few days.

Offers into Bangladesh from the US remained mostly absent due to bid-offer disparity and lower interest for US- and Europe-origin materials.

Vietnamese buyers offer lukewarm response: Workable levels for US-origin HMS (80:20) bulk were $340-345/t, with offers at $355-360/t CFR Vietnam. However, weak buying interest pushed US-origin bulk HMS (80:20) offers down to $355-360/t CFR from $365-370/t, amid competitive Japanese prices and long delivery times. US-origin bulk HMS (80:20) stood at $351/t CFR Vietnam, down $9/t w-o-w.

Outlook