US scrap prices have stayed more or less stable since the big hit they took at the beginning of May. In some Midwestern regions, such as Chicago, prices for certain grades have bounced back by $10 to $15 /long ton in the last month, as some considered the May price drop to be too steep. In some other markets, prices had a more difficult time rising and did not register any significant increase.
Recent steelmaking operation stoppages have also affected scrap prices as of late, especially on the East Coast, due to the shutdown of Arcelor Mittal Steel's plate mill in Cotesville, Pennsylvania. The mill, which has an annual raw steel production capacity of about 800,000 mt per year, suffered damages in May in an explosion accident, and so will remain closed in June. There are also other various mill stoppages and production reductions in the US, and the resulting lack of consumption in the country have caused the pricing trend for US scrap to be flat for the time being.
Scrap supplies are decent, with plenty of availability to meet domestic as well as foreign demand. Inventories are expected to stay at a moderate level. Mills are pushing for cheaper scrap prices, but are unable to get them thanks to resumed export buying from foreign markets.
Current domestic busheling scrap stands at $280 - $290 /long ton, with shredded scrap going for $265 - $270 /long ton. HMS I now ranges from $240 - $250 /long ton. At the beginning of June, market prices for industrial auto bundles increased by approximately $15 /long ton, now ranging from $295 - $305 /long ton.
In the second half of the year, scrap prices will be determined by the finished product markets. Producers would like to increase prices for their finished products; however, the finished product markets are currently not very strong and may weaken further, since traditionally the summer months are a slow time for the steel market. Therefore, market sources expect that scrap prices will stay fairly stable until August.
As for the export market, scrap exports are continuing, with Turkey being the main customer for US scrap from the East Coast. Last week, SteelOrbis learned that a Turkish mill has concluded a booking of a single cargo of scrap ex-US for June shipment. The cargo is composed of shredded scrap booked at $346 /mt CIF Marmara, HMS I/II 90:10 scrap booked at $341/mt CIF Marmara and P&S scrap booked at $351/mt CIF Marmara. Freight rates are at a high level of $50 - $55 /mt from US East Coast to Turkey, so Turkish mills are negotiating with US scrap yards to get price cuts.
The amount of export tonnage significantly dropped in March from February. The total amount of ferrous scrap exports from the US in March totaled 774,000 mt, 422,000 mt less than the amount exported in February. However, the total amount of ferrous scrap exports in the first quarter of 2007 was 2,802,000 mt, an increase of 35.1 percent when compared to the figure of 2,074,000 mt for the corresponding period of 2006.
The most recent USITC data available show that during the month of March 2007, the top recipients of shredded scrap from the US were: Turkey at 165,000 mt, Malaysia at 49,000 mt, Mexico at 38,000 mt, and Greece at 33,000 mt. Korea, India and Egypt also imported shredded scrap from the US in March.
The top importers of HMS 1 grade scrap from the US in March 2007 were: Turkey at 60,000 mt, Malaysia at 38,000 mt, and Korea at 26,000 mt. Some other countries which imported HMS 1 grade scrap from the US in March include: Taiwan, Egypt, Thailand and Columbia.