US: Ferrous scrap market faces downturn amid weak demand, maintenance breaks

The US ferrous scrap export index dropped by $6/tonne (t) w-o-w driven by weak demand from the leading importer, Turkiye, as well as other South Asian countries. Additionally, several US steel mills have been under maintenance since August, with maintenance work expected to continue through late September to early October, further dampening market sentiment.

A trader noted, "The early effects of this upcoming maintenance downtime were already evident in August's trade, especially for prime scrap dealers."

A US-based seller said, "Domestic demand for scrap was comparatively better as steel mills benefited from the softening export offers, thanks to Turkiye's purchasing at lower prices."

Buy-side perspective: Turkish mills defended their low bids by pointing to weak rebar prices, recent lower export sales, and cheaper billet availability. With Chinese billet prices falling to $485/t CFR, their lowest since April 2020, Turkish mills were able to secure a substantial amount of material at a favourable cost compared to scrap.

According to a recent report, Habas, a major Turkish steelmaker, has purchased 50,000 t of billets from China at $465/t CFR, delivered to Turkiye.

In contrast, Bangladesh has reportedly booked two US bulk scrap cargoes from a US West Coast supplier at nearly stable prices compared to previous deals. Despite ongoing political instability, active inquiries from Bangladesh kept prices within a range. Approximately 32,000 t of mixed scraps were booked, including HMS (80:20) at $406-410/t CFR and shredded scrap at $410-415/t CFR. However, buyers are no longer accepting these offers and are expecting a price drop based on global trends. Meanwhile, suppliers are holding firm, noting the pent-up demand from Bangladeshi buyers.

US suppliers are concerned that Turkish buyers' downward pressure could influence purchasing patterns in other markets as well.

Assessments:

• BigMint's assessment for HMS (80:20) bulk FOB East Coast decreased by $6/t w-o-w to $347/t on Friday, down from $353/t a week ago.
  
  
• BigMint's assessment for shredded bulk FOB East Coast also decreased by $6/t w-o-w to $367/t on Friday, down from $373/t a week ago.
  
  

Outlook

The near-term outlook for the US ferrous scrap export market is stable in September. While mill outages are a concern, steady steel prices and ongoing activity at rolled mills suggest a sideways market is more likely. However, if winter turns out to be harsh, it could further impact the market in November and December. The current sentiment favours stability to avoid exacerbating challenges when mills resume full operations.