US: Ferrous scrap export prices remain range-bound w-o-w; firm price outlook amid slow scrap collection
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US ferrous scrap export prices held steady from June amid better export volumes and reduced scrap collection activity limiting supply. Despite ongoing weakness in the domestic flat-rolled steel market, there were no initial bids from steelmakers to lower old scrap prices.
Despite initial downward pressure on scrap prices, market participants observed a trend toward maintaining current levels amid ongoing negotiations. The interplay between prime and shredded scrap prices remained pivotal, shaping market sentiment and operational decisions. If shredded scrap prices were to drop further in the eastern US shredders might go for exporting scrap to the Asian region.
For instance, Hot-rolled coil (HRC) prices continued to fall, prompting buyers to wait for a potential bottom before re-entering the market. This trend shows that domestic HRC prices are significantly lower than imported options. Meanwhile, Midwest HRC prices dropped by $60-65/t to $655/t exw Indiana. Negotiations for prime scrap prices are ongoing.
A market insider mentioned, that busheling holds more value for flat-rolled steel producers, and trimming busheling prices without a major reduction in shredded scrap prices would be less logical.
US domestic ferrous scrap prices
Domestic scrap prices remained stable, with busheling at $380/t delivered Midwest and $395/t delivered Southeast, and shredded scrap at $375/t delivered Midwest and $385/t delivered Southeast. In regional trades, busheling was $385/t in Cleveland (Midwest), and $375/t in the Ohio Valley (Midwest), while shredded scrap was $375/t in Chicago (Midwest) and the Ohio Valley (Midwest), and $380/t in Cleveland (Midwest). PNS scrap prices were unchanged at $350/t delivered Midwest and $365/t delivered Southeast. HMS scrap prices remained stable at $310/t delivered Midwest and $330/t delivered Southeast.
Ferrous scrap prices for July settled unchanged in the US Midwest and Southeast. Mills are not purchasing much scrap this month, making it an inopportune time to press dealers, according to a northeastern US participant. Different views among participants created uncertainty across regional markets.
A regional mill initially cut its bid by $20/t for prime scrap due to declining domestic HRC prices. However, the mill adjusted its bid for busheling to no price change after other Midwest steelmakers opted not to follow suit.
Export market scenario-
Turkiye takes limited US scrap vessels: Around one US east coast bulk scrap cargo has been booked in the second week of July so far as compared to four to five in the previous week.
The Turkish government recently announced a 30% rise in industrial usage and this change is expected to impact Turkish steel producers, already facing resilient scrap prices and sluggish demand. The pressure on producers is likely to persist unless prices in the US recover.
Turkish imported HMS (80:20) scrap from the US remained at the $388-390/t range CFR for the last two weeks.
Asian buyers active in US bulk scrap: US-origin bulk scrap offers continued to decline for Vietnam and Bangladesh by $3-4/t w-o-w keeping buyers more interested in restocking materials for the next production cycle.
Sources indicated that major buyers from Dhaka and Chattogram are likely to book some cargo from the US by the end of this month due to favourable prices.
The market is seeing increased activity before the monsoon intensifies, particularly with heightened interest in US bulk scrap as buyer-seller price expectations converge. According to a buyer source, a bulk vessel booked from the US in May has recently arrived due to delays in processing letters of credit (LCs).
Assessment trend
- BigMint's assessment for HMS(80:20) bulk, FOB east coast decreased by $2/t w-o-w to $362/t on Friday, from $364/t a week ago.
- BigMint's assessment for shredded bulk, FOB east coast decreased by $2/t w-o-w to $382/t on Friday, from $384/t a week ago.
Brent crude oil has been trading between $75-$90 per barrel since late 2022. Organisation of the Petroleum Exporting Countries (OPEC+) production cuts have kept prices stable, preventing significant surges despite ample spare capacity and an uncertain demand.
OPEC+ cuts: These have created a price floor, with prices unlikely to drop below $80.
Spare capacity: OPEC+ has 5.8 million barrels per day in spare capacity, mainly from Saudi Arabia, the UAE, and Iraq.
Demand issues: Stagnant demand in the west and China, with recent declines in Chinese demand.
Sanctions on Russia: Limited impact due to new buyers in China and India.
While stable brent prices may benefit the steel industry, the direct impact on US ferrous scrap export prices is expected to be minimal.
Outlook: Reports indicate that regional mills and several large sellers are holding significant scrap inventories, looking ahead to the third quarter, renewed demand suggests that stocks may deplete quickly once demand returns and export prices will continue to remain firm.
