After registering a slight increase in the beginning of January, many people were hopeful that US scrap prices would trend sideways in February; however, with the uncertain economy and weakening finished product markets, February US East Coast scrap prices have dropped by approximately $40 /long ton (lt) for busheling, $40 /lt for shredded, and $15 /lt for HMS I.
Currently, East Coast busheling scrap prices range from $230 to $240/lt. Shredded scrap is sold for $220 to $230/lt, while HMS I prices are at the level of $195 to $205/lt.
With the combination of the depressed world economy, sluggish finished product markets and weakening scrap exports, domestic mills are not in any hurry to purchase scrap at present. Although a few insiders think that domestic mills' inventories are at low levels and that the mills will therefore need to buy at least some scrap tonnage soon, most market sources believe that the demand is still weak and the overall picture of the scrap market is still uncertain.
On the export side, the market has been quiet since two weeks ago due to the weak finished product markets and production cutbacks. Offers from US scrap suppliers to Turkey have declined by approximately $15 /mt from a month ago to the current level of $265 /mt CFR for HMS I/II 80:20.
The latest USITC data show that the total amount of ferrous scrap exports from the US in November 2008 was 884,000 mt, reflecting a decrease of 309,000 mt when compared to the figure of 1,193,000 mt in October 2008. However, the total amount of US scrap exports from January to November 2008 was 15,066,000 mt, representing an increase of 49.4 percent when compared to the figure of 10,082,000 mt in the corresponding period in 2007.
The top recipients of shredded scrap from the US in November 2008 were: Turkey, at 173,000 mt and China, at 135,000 mt. Some other countries which imported shredded scrap from the US in November include Greece, India and South Korea.
For HMS I grade scrap, the top recipients of US exports in November 2008 were: Turkey, at 238,000 mt; Egypt, at 49,000 mt; South Korea, at 42,000 mt; Taiwan, at 23,000 mt; and China, at 20,000 mt. Indonesia, Bangladesh and Japan also imported some tonnage of HMS I grade scrap from the US during the period.
The pig iron market is similar to scrap in that demand is still weak. Mills have adequate inventories from their prior transactions, and it is not expected that they will purchase any significant tonnage of pig iron in the first quarter, again due to the uncertain economy, slow finished product markets and the production cuts of the domestic mills.
Pig iron prices went up from $260 /mt to as much as $300 /mt in the month of January and then came back down to the current level of $270 /mt FOB Southern Brazil. Raw materials traders mention that 2009 will be a difficult year for the steel industry and predict that the current dismal market situation will last at least for the first and second quarter; therefore, most don't expect anything special in the first half of the year.
Statistics show that from January to November 2008 the total amount of pig iron imported into the US was 4,857,428 mt, which represents a decrease of 11,820 mt when compared to the figure of 4,869,248 mt in the corresponding period of 2007. The top pig iron exporters to the US during the period were: Brazil, at 3,560,686 mt; Russia, at 711,278 mt; Ukraine, at 259,006 mt; and South Africa, at 92,900 mt. The US also imported some tonnage of pig iron from Sweden, Venezuela and Trinidad & Tobago.