USA: Ferrous scrap export index falls to 9-month low on weak market sentiment
...
The US ferrous scrap export index dropped to a nine-month low, the lowest since November 2023, due to reduced demand from major importer Turkiye and South Asian countries. Maintenance at several US steel mills, which began in August and is expected to continue through late September to early October, has also dampened market sentiment.
A mill official commented, "September's planned outages may be extended due to weak orders, which is also when low-priced billets typically become available."
Additionally, the U.S. dollar has weakened due to concerns about a slowing economy and expectations that the Federal Reserve may soon cut interest rates, negatively affecting scrap export offers. The extent of the dollar's decline and whether the Fed will opt for a 25 or 50 basis point rate cut at its September meeting remain uncertain.
The U.S. domestic ferrous scrap market continued to face challenges, with global trends indicating that conditions are likely to remain tough. Sources report that the anticipated boost in trade for August did not materialise, leading sellers to lose hope for improvement in September.
Turkiye's imported scrap prices have hit a multi-month low, with further declines expected due to the influx of low-priced Chinese billets. In August, US sales to Turkiye fell sharply to 11 cargoes from around 20 in July. The Turkish ferrous scrap market faced a challenging week, with prices falling to near 10-month lows. Initially stable, prices of US-origin HMS (80:20) began to drop as mills pressured recyclers. By the week's end, the index fell to $360/t CFR, with some buyers predicting a further drop to $350/t CFR amid falling iron ore prices and excess scrap inventory.
A recent deal for USA-origin bulk HMS (80:20) vessel was heard to have been booked by a West Marmara-based steel mill at $360/t CFR.
For India, a market participant expressed skepticism about Indian buyers' interest in bulk purchases, citing current prices of $375/t for shredded and $365/t for HMS. They believe major Indian buyers are waiting for prices to bottom out, potentially by September, before rebounding. The participant noted that current focus is on finding optimal price levels, as Turkiye's low prices have made quoting more challenging without fully considering freight and other costs.
Bulk inquiries from Bangladesh for US West Coast scrap were minimal this week due to a sluggish steel market, impacted by weak construction and infrastructure activities along with the economic uncertainty. Market participants noted that a major Bangladeshi steel mill has ample stock and is unlikely to make significant purchases until October.
Assessments:
- BigMint's assessment for HMS (80:20) bulk FOB East Coast decreased by $14/t w-o-w to $333/t on Friday, down from $347/t a week ago
- BigMint's assessment for shredded bulk FOB East Coast also decreased by $14/t w-o-w to $353/t on Friday, down from $367/t a week ago.
USA's domestic market
The domestic market outlook is bleak due to numerous planned maintenance outages and stagnant hot-rolled coil prices, with 15 outages scheduled for September, a third in Chicago. Declining US ferrous scrap export prices have also pressured the domestic market ahead of the early September buy-week. Domestic shredded scrap was last assessed at $375/t delivered Midwest.
Additionally, a labour dispute has halted Canadian rail transport starting 22 August, disrupting US ferrous scrap imports from Canada, the top exporter of scrap to the US. This disruption could potentially support domestic US prime scrap prices in September if it continues, impacting monthly trade negotiations and logistics for various commodities.
Outlook
The U.S. ferrous scrap export market is struggling due to economic uncertainties, geopolitical factors, and fluctuating global scrap prices. Dealers and exporters foresee a further decline in the market outlook, with shifting currency values and weak buyer demand anticipated to affect near-term pricing.
