By Stuart Burns
The ferrous scrap market has been a reflection of the finished steel market this quarter, at least in Europe and Southeast Asia, according to Delphica, a Ukrainian steel market analytics firm. A recent report showed the market as being characterized by poor buyer interest in light of weak finished steel demand and ample supplies, despite a temporary stoppage on Ukrainian exports.
In Europe, the largest import market for ferrous scrap, Turkey, has recently placed an order for a 20,000-ton U.S. delivery of HMS 1 & 2 (80:20) and Shredded with the HMS priced at US$401/metric ton CIF, in line with the last month's prices that have hovered a few dollars either side of US$400/ton for HMS 1 & 2 mixed cargoes. In Asia, South Korea has imported more in February than January, 811,000 tons against 666,000 tons. But even so, prices have remained under pressure with HMS 1 quoted at US$420/ton and HMS 1&2 mixed at US$380-$390/ton.
However, buyers are few and far between in March with the expectation that prices will fall some US$10-$15 per ton. Delphica goes as far as giving a prediction for prices over the next couple of months for the Turkish market (the destination of a significant quantity of U.S. exports), as shown below.
Click to enlarge image.
Lower Turkish prices may dissuade U.S. exporters from exporting for a few months and improve the availability of domestic supply, particularly if the U.S. dollar strengthens on continued European market uncertainty.