WEEKLY SCRAP WRAP: Prices continue to rise despite Section 232 uncertainty
Prices for ferrous scrap in the major global markets kept rising over the past seven days despite questions over how the new US import tariffs on steel could affect the scrap markets.
Good scrap demand has led to higher prices in the import markets of Turkey, India and Taiwan, while US export prices have stayed stable.
Turkish steel mills continued to book scrap at higher prices this week, until the prices inched downward at the end of the week after US President Donald Trump confirmed the imposition of 25% tariffs on steel imports into his country.
A steel mill in the Izmir region of Turkey was heard booking a Baltic Sea cargo on Monday March 5, comprising HMS 1&2 (80:20) at $372 per tonne and bonus at $382 per tonne cfr. The breakdown of the cargo was not clear at the time of publication.
A steel mill in the Marmara region booked a Baltic Sea cargo on March 6, comprising 20,000 tonnes of HMS 1&2 (80:20) at $374.75 per tonne and 5,000 tonnes of bonus scrap at $384.75 per tonne cfr.
A steel mill in the Izmir region booked one UK cargo, comprising 23,000 tonnes of HMS 1&2 (80:20), at $370 per tonne cfr late on Tuesday.
And a mill in the Marmara region booked another UK cargo, of 22,000 tonnes of HMS 1&2 (80:20), at a similar price on the same day, sources said.
A steel mill in the Marmara region of Turkey booked a Baltic Sea cargo late on March 8, comprising 28,000 tonnes of HMS 1&2 (80:20) at $375.25 per tonne and 7,000 tonnes of bonus at $385.75 per tonne cfr.
Although Turkish mills shook off the uncertainty over Section 232 tariffs last week and at the start of this week, the Baltic Sea cargo booked late on Thursday led to questions over whether the market could start to weaken.
“I am not sure if this cargo was booked before or after the Section 232 announcement, but the market will definitely be cautious with the next bookings,” a trading source said.
Despite some jitters, most scrap market participants believed the tariffs would push up scrap prices into Turkey.
“The tariffs are basically telling local US mills to raise their steel prices by 25%,” one scrap seller said.
“US scrap prices will go up and there might be a shortage of scrap. That is why Turkey is buying so many cargoes now,” another trading source said.
The ferrous scrap export prices in the US are racing upward despite an absence of bulk activity to Turkey, due to strong demand for cargoes and containerized scrap from mills in Asia and India.
After several quiet weeks, the US West Coast bulk scrap export market has caught fire, with prices in one of two recent sales pushing past $400 per tonne for HMS 1&2 (80:20).
One West Coast cargo was transacted to Taiwan at $397 per tonne cfr late last week, while a second cargo containing shredded scrap was sold to a Bangladeshi mill at $415 per tonne cfr on March 5, sources said.
“It is definitely a seller’s market in Asia right now,” a broker source said, adding that Vietnam and Bangladesh are currently in need of scrap. “Demand is strong out of Asia, and buyers are chasing both container and bulk scrap.”
On the US East Coast, no new bulk deals have been confirmed since February 21, when a US exporter sold a cargo to Turkey at $360.50 per tonne cfr for HMS 1&2 (90:10). US exporters are busy fulfilling previous orders and are holding back on cargo offers for the moment, sources said.
“I think everybody has oversold and there really is nothing left to offer. You are probably not going to see much export action on the East Coast over the next 10 days,” an export source said. “The tariffs are driving domestic prices through the roof, so if the Turks want scrap they are going to have to pay up.”
Export yard buying prices remained stable this past week as East Coast exporters continue to seek tons for existing sales. But market participants expect some of the upward momentum from the domestic sector will boost prices at the docks soon.
“Once the weather improves, scrap is going to start coming out, but for now flows haven’t been great because we got hit with one snowstorm last week and we are expecting another this week,” an East Coast dealer said, noting that he is holding out for better pricing from exporters.
Meanwhile, containerized shredded scrap on the US East Coast continues to show gains on strong demand from emerging markets. Prices rose to $358-365 per tonne fas from $350-358 per tonne fas a week ago.
“I think prices are going to rest a little at this level for now, and maybe we will have a little more upside later in the month,” an export source said.
Prices for shredded scrap imported in containers into India increased for the fifth week running on Friday, supported by good demand and robust international scrap markets.
Despite the gains, certain market sources said that the market could stop rising over the next seven days, with Indian finished steel prices struggling amid a drop in Chinese rebar prices and worries over the implementation of US import tariffs.
Deals were heard at $390-405 per tonne cfr Nhava Sheva from the UK and Europe during the week, including transactions for 2,000 tonnes, 1,500 tonnes and 1,000 tonnes.
Mills in the Asian country were keen to secure supplies of shredded scrap, particularly given the tightening in supply which has developed over recent weeks, sources said.
“No mill has stock - everyone is still buying hand-to-mouth,” one buyer said.
“There was low collection, and most yards sold their material before the cold weather in Europe because prices were so good,” he said, adding that certain sellers were holding back material in the expectation that prices would rise again soon.
Despite the strong rise in Indian import scrap prices over the past month, both import scrap demand and the upward momentum of finished steel prices in the country have stalled this week, some market sources said.
“People are holding off from buying until the market stabilizes, I don’t think India will keep buying,” one seller said.
Uncertainty over Section 232 is also clouding the outlook for the market.
Fewer new bookings are expected into India over the next week, another trader said, because there are worries in the Indian domestic steel markets about the effect of the Section 232 tariffs and whether the trade measures will divert large volumes of steel into the Indian domestic market.
A fall in Indian domestic billet prices this week was also attributed to jitters about Section 232 from sellers of the semi-finished material.
The US’ blanket tariff on steel imports boosted import prices for containerized scrap in Taiwan this week, leaving market participants in the wider Asia region bracing themselves for the reality of having to pay more for the steelmaking raw material.
Sellers of US-origin ferrous scrap have taken the chance to raise their offers this week, riding on the bullish sentiment in the US market.
“US recyclers increased offers to Asia this week after domestic steel prices in the US went up,” a Taiwanese trader said.
By Friday, offers for containerized HMS into Taiwan had increased to $365-370 per tonne cfr, compared with $353-356 per tonne cfr earlier in the week.
Buyers who scrambled to snap up cargoes before further price increases made bookings at $360-365 per tonne cfr this week. Among them was a major electric-arc furnace mill that bought 4,000-5,000 tonnes of imported scrap.
The uptrend is expected to continue until the bullish sentiment in the market dissipates once prices get too high, sources said.
“More price increases should come until end-users start looking for alternative sources from Japan, Hong Kong and China, and start staying away from US-origin scrap,” a major Taiwanese end-user source said.
The short-term bullish sentiment has spread to Vietnam, another key scrap import market. Market participants there say that this is the start of a constant upward trend in prices.
“Both domestic and import prices of ferrous scrap have increased continually this week, with mills increasing their bids for containerized US-origin cargoes,” a Vietnamese trader said.
But this does not mean that the supply of ferrous scrap for Vietnam would be limited in the long-term.
“Ferrous scrap supply from the US West Coast will continue to head to Asia because there are high costs involved for moving scrap to domestic markets [in the US] using railroads,” a trader in Vietnam with close knowledge of the US scrap market said.
Turkish domestic scrap prices strengthened over the past week, in line with rising imported scrap costs, sources said this week.
The change came about after a number of steel mills raised their scrap buying prices by TRY10-40 ($3-10) per tonne.