US: Ferrous scrap export index recovers $3/t w-o-w after hitting 9-month low

The US ferrous scrap export index increased slightly due to firm offers and limited availability, which pushed market sentiments towards the seller side. The index recovered by $3/tonne (t) w-o-w after hitting a nine-month low due to dull demand from major importers such as Turkiye and South Asian countries. Export activities were sluggish, with only three to four cargoes sold off the East Coast as of this week, compared to over ten in July.

The FOB prices for HMS (80:20) dropped to $333-343/t CFR in August from $360/t a month earlier.

A supplier stated that their export partner reduced buying prices by $10/t in mid-August and indicated further cuts could follow, potentially affecting the market through the rest of the year.

Assessments:

BigMint's assessment for HMS (80:20) bulk FOB East Coast increased by $3/t w-o-w to $336/t on Friday, up from $333/t a week ago

BigMint's assessment for shredded bulk FOB East Coast also increased by $3/t w-o-w to $356/t on Friday, up from $353/t a week ago.

Buyers' market update:

Turkish market: Offers for US-origin scrap are currently in the range of $365-368/t CFR. The short-sea market is now at $360/t CFR, narrowing the gap between short-sea and deep-sea scrap to just $4/t. This shift is driven by the recovering scrap price, which hit a bottom of $360/t for deep-sea transactions and is influenced by the strengthening euro, signs of economic recovery in China, and increased demand from mills.

Bulk inquiries from Bangladesh for US West Coast scrap were dull this week due to a weak steel market, impacted by heavy floods along with banking-related issues.

US domestic scrap market:

In the domestic ferrous scrap market, trading is expected to face challenges in the coming weeks, with some positive signs emerging in the hot-rolled coil (HRC) market.

After a prolonged decline since April, HRC prices are experiencing a modest recovery, indicating that the worst may be over. However, the scrap market remains under pressure, with limited supplies and higher mill operation rates contributing to a sideways trend in September, despite reduced export volumes.

Mixed price trends for ferrous scrap shredder feed: Ohio Valley and Southeast shredder feed prices fell slightly, while Midwest prices rose marginally.

The RMDAS ferrous scrap index in August, which indicates spot market prices for steel mills and foundries in the US, witnessed a positive trend. The index recorded the following prices:

• Shredded scrap increased by $2/t to $381/t.
  
  
• Prompt industrial composite scrap increased by $3/t, settling at $396/t.
  
  
• The HMS index increased by $5/t, reaching $326/t.
  
  

The recent Canadian rail disruption, which briefly halted cross-border transport, did not have the expected impact on scrap prices. The disruption was short-lived and quickly resolved, so it did not provide the anticipated support for the market.

In the domestic scrap market, a mixed picture is emerging. Prices for prime scrap could see some increase due to a noticeable gap between pig iron and busheling prices. However, the outlook remains cautious with 15 mill outages scheduled for September, which contributes to a generally bearish sentiment.

The outlook for September trading suggests a likely decline in US domestic ferrous scrap prices. This is influenced by lower scrap inquiries in the domestic market amid ongoing mini-mill maintenance outages. On the flip side, Turkish mills, facing fewer billet offers, will continue showing interest in scrap imports, partly due to a modest recovery in iron ore prices. This increased interest could boost scrap purchases from the US, especially if developments in the Chinese market further influence the situation.