WEEKLY SCRAP WRAP: Prices largely stable on Section 232 uncertainty
Global scrap prices remained generally stable except in Taiwan during the working week from Monday March 12 to Friday March 16, amid the uncertainty created by the implementation of Section 232 tariffs in the United States and widespread weak demand for finished steel products.
Turkish steel mills have stepped back from the deep-sea scrap markets since the end of the last week and have made no significant booking since then.
However, imported scrap prices in Taiwan rose further this week amid sustained optimism arising from the new US import tariff of 25% on steel. This was enacted on March 8 after the country concluded an investigation into the threats to national security posed by steel imports.
The Turkish steel mills paused their deep-sea scrap purchases late last week, following the news of the US applying import duties under Section 232 but exempting Mexico and Canada.
Meanwhile, sluggish demand for rebar in the country’s domestic and export markets also tended to keep the mills out of the scrap markets.
Turkish rebar cargoes, previously sold to the US, were heard being diverted to other destinations because of the new import tariff.
Market participants were unsure about the future direction of the market after US President Donald Trump used his powers under Section 232 to approve the previously announced tariffs on steel and aluminium imports into the US, on the grounds of national security.
“Turkish steel mills are at a standstill, refusing to pay the higher US East Coast prices [for ferrous scrap], while the recyclers feel they should get a result [from the] Section 232 [action]. So, nothing has been sold from the US in the past week,” a trading source said.
“But there’s plenty of material available, despite the two north-easterly snow storms that pounded the US East Coast, from [the state of] Maine to New York, yesterday and Wednesday last week,” he added.
“Meantime, the Turks actually cut back some production, knowing they won’t be shipping or selling much to the US in the near term, or until the dust settles on the Section 232 decision. So, they need less scrap,” he said.
“I feel there is plenty of export scrap tonnage available, despite the increased prices and domestic buying in the US,” he added.
In the meantime, some Turkish mills were heard booking short-sea scrap for their urgent requirements. Market participants said that some short-sea cargoes were booked at $361-365 per tonne cfr for CIS-origin A3-grade scrap.
US ferrous scrap export prices have shown mixed dynamics this week amid the uncertainty generated by the Section 232 tariffs and the absence of a post-holiday price rally in China. There were no new bulk sales heard from either coast.
On the US East Coast, prices for containerized shredded scrap took a breather from back-to-back increases, while exporters in Boston caved in to the upward pressure and raised buying prices in the region. On the US West Coast, prices for containerized HMS 1&2 (80:20) continued to climb.
“Exports seem to have stalled for now and the exporters are being more conservative than they were last week,” a seller to both the docks and the domestic mills said. “But it is looking like it’ll be an upward market in April [domestically].”
Meanwhile, the price of containerized shredded scrap on the East Coast was still firm at $358-365 per tonne fas, unchanged from a week ago. Market participants believe that prices will not retreat any time soon.
“I think this pause is temporary and prices could continue pushing up in a week or two,” a broker source said, noting that the supply chain for shredded scrap on the East Coast is too tight for prices to go down in the near term.
On the West Coast, prices for containerized HMS 1&2 (80:20) increased further this week despite market rumors that a drop in Chinese billet export prices could affect scrap demand in East Asia.
Sales into Taiwan concluded at $360-370 per tonne cfr during the week ended March 9. This pushed local prices for containerized HMS 1&2 (80:20) to $355-360 per tonne fas, up from $340-350 per tonne fas the previous week.
“I think there is a bit more upside to prices but it may get capped by the drop in Chinese futures and the drop in [steel] prices there,” an export source said. “We’re not seeing the usual post-holiday rally [in China]. Billet prices are down, which will not be missed by Taiwanese buyers.”
Meanwhile, no new bulk export sales have been confirmed transacted from the US East Coast over the past three weeks. Turkish mills have completely retreated from the deep-sea market since March 8, seeking refuge from uncertainties after the Section 232 action was signed.
Import prices for containerized HMS-grade scrap in Taiwan increased further this week amid sustained optimism arising from the new US import tariff on steel.
At least four deals were heard concluded within the assessment range during the week. A major buyer was heard to have purchased 5,000-6,000 tonnes of imported scrap at close to $370 per tonne cfr Taiwan.
Offers for US-origin scrap climbed steadily from $365-370 per tonne cfr earlier in the week to $375 per tonne cfr by Friday.
Suppliers continued to hold out for prices to rise further, although market sources noted the increase in the number of offers.
“Some suppliers are of the view that prices are high enough and have released more volumes into the spot market,” a Taiwanese trader said on Friday.
The rapidly increasing offers over the past few weeks have put off buyers, who are watching the trends in the international market keenly.
“International prices have also stopped climbing and this has led to traders and sellers increasing the number of cargoes in the spot market, even as they try to sell at the price peak,” another Taiwanese trader said, referring to scrap import prices in Turkey, a key benchmark.
“Suppliers are not likely to let their offers drop quickly any time soon, so prices should stay range-bound for the time being,” an end-user source said.
Any further price change will depend on developments in the US market, especially the availability of scrap shipments from the country’s West Coast, sources said.
Trades of ferrous scrap in containers to India have declined sharply this week, amid worries about the knock-on effect of the steel import tariffs being imposed in the US, sources said.
Buying activity for shredded scrap in containers was steady at the beginning of the week, and at high prices. Toward the end of the week, activity cooled off dramatically although prices remained firm.
“Nobody is buying. People are scared about what could happen if they take positions and suppliers are not willing to decrease their prices,” according to one trader.
“The Indian market is a bit quiet at this time due to all this uncertainty caused by the US sanctions announcement. The major fear is the dumping of excess material into India,” one seller said.
Metal Bulletin’s weekly index for containerized imports of shredded scrap into India was $398.95 per tonne cfr Nhava Sheva on March 16, up by just $0.32 per tonne week-on-week compared with $398.63 per tonne cfr last week.
Deals were heard at $360-400 per tonne cfr Nhava Sheva at the beginning of the week, including one transaction for around 12,000 tonnes.
With the combination of low scrap demand and uncertainty over the effect of tariffs, most market sources predicted price drops in the coming weeks.
“The market is sitting on a peak for scrap. Sitting on the hill, you can’t go up, you have to go down,” another seller said.
One potential boon for Indian scrap prices is a shortage of material at mills, sources said.
“There are limited inventories, so market participants need to make sure to pick up imported material as early as possible. Maybe at start of the next week, they will resume trading activity,” one trader said.
Turkish domestic scrap prices moved in varying directions at the beginning of the week, with some mills raising their buy prices for auto bundle scrap, and one mill reduced its buy price for ship scrap, sources said on Monday March 12.
Three steel mills raised their buy prices for auto bundle material by TRY5-20 ($1-5) per tonne, after the uptick in imported scrap prices in the previous week.
Meanwhile, ship scrap prices have gone down slightly, with one steel mill in Izmir reducing its buy price by $2 per tonne to $360 per tonne because there was a lower requirement for material.
Lee Allen in London, Mei Ling Toh in New York and Paul Lim in Singapore contributed to this report.