US scrap prices have risen since the start of the New Year, with busheling prices up by approximately $15/lt so far this month, and shredded and HMS I up by about $20/lt.
Domestic mills' scrap purchasing activity is still slow, as the finished products market remains quiet and some mills are still idle. However, there is not much supply in the market and, therefore, prices have risen, though only slightly.
With the economic downturn, automotive and manufacturing production activity has dropped off sharply, resulting in less scrap being generated. Moreover, the winter conditions make scrap collection and shipping difficult, which also contributes to the low scrap availability.
On the US East Coast, current busheling scrap prices now range from $270 to $280/lt. Shredded scrap is sold for $260 to $270/lt, while HMS I prices now range from $210 to $220/lt.
On the export side, activity is also starting to pick up, as foreign mills' scrap inventories are at low levels. Export scrap tonnages that were sold on the East Coast in the fourth quarter have started to ship out this week, and Turkish mills are currently in the market to buy more scrap from the US, with bookings expected to increase in the next couple of weeks.
SteelOrbis has learned that in the second week of January, a Turkish mill concluded a deal for an ex-US scrap cargo at $281/mt CIF Marmara for HMS I/II 80:20 and another at $286/mt CIF Marmara for shredded. The same buyer also concluded a deal for another ex-US scrap cargo at $280/mt CIF Marmara for HMS I/II 80:20 and another at $285/mt CIF Marmara for shredded. These prices reflect an increase of approximately $35 to $40/mt from similar deals concluded a month ago.
Looking back at 2008, US scrap exports, at least for the first 10 months of the year, were up from 2007, as foreign buyers took advantage of the weak US dollar. From January to October 2008, the total amount of US scrap exports was 14,182,000 mt, which reflects an increase of 57.8 percent when compared to the figure of 8,990,000 mt in the corresponding period in 2007. The latest USITC data show that the total amount of ferrous scrap exports from the US in October 2008 was 1,193,000 mt, representing an increase of 62,000 mt when compared to the figure of 1,131,000 mt in September 2008.
The top recipients of shredded scrap from the US in October 2008 were: South Korea, at 237,000 mt; China, at 210,000 mt; India, at 85,000 mt; Pakistan, at 39,000 mt; and Greece, at 33,000 mt. Turkey, the leading scrap importer from the US, only imported 27,000 mt of shredded scrap from the US in October, while in September, it imported 368,000 mt. Malaysia and Japan also imported some tonnage of shredded scrap from the US during the period.
For HMS I grade scrap, the top recipients of US exports in October 2008 were: South Korea, at 99,000 mt; China, at 50,000 mt; Turkey, at 31,000 mt; and Egypt, at 20,000 mt. Some other countries which imported HMS I grade scrap from the US in October include Malaysia, Japan, and Bangladesh.
As for pig iron, demand from the US and around the globe is limited, which is again due to the slow finished products market, construction market, and the credit crunch. In the US, buyers are no longer able to buy as much tonnage on credit, which is restricting their purchases. Market sources said that pig iron sales in the last two quarters of 2008 were very weak, as many orders were canceled and with the weak steel demand, a lot of tons were sitting idle in warehouses. However, going forward, Brazilian production of pig iron is expected to drop as many producers are closing due to the high cost of production and weak demand from steel mills. This may help tighten up the supply in the market.
Regarding the current world pig iron prices, Brazilian offers presently stand at about $260/mt FOB Vitoria, Southern Brazil. Market insiders think that this level reflects the bottoming out of prices and expect Brazilian offers will rise slightly to a level of $280 to $300/mt FOB in the first quarter of 2009. Chinese pig iron is currently offered at around $300/mt CFR US Gulf.
Statistics show that from January to October 2008 the total amount of pig iron imported into the US was 4,401,756 mt, reflecting a decrease of 27,518 mt when compared to the figure of 4,429,274 mt in the corresponding period of 2007. The top pig iron exporters to the US during the period were: Brazil, at 3,140,139 mt; Russia, at 711,278 mt; Ukraine, at 259,005 mt; and Canada, at 139,247 mt. The US also imported some tonnages of pig iron from South Africa, Sweden, Venezuela and Trinidad & Tobago.