The summer market for ferrous scrap has remained in the doldrums through mid-August, with only rare glimpses of a rebound in pricing having been experienced at all in 2024 so far.
As measured by mill transaction pricing collected by the Raw Material Data Aggregation Service (RMDAS) of Pittsburgh-based MSA Inc. and by intelligence gathered by Davis Index, July prices for benchmark grades were stable in the best cases and managed to drop further in others.
Sellers of ferrous scrap and those holding inventory have not received better news in August. In mid-August, Davis Index is reporting prices for benchmark grades including No. 1 busheling, shredded scrap and heavy melting steel (HMS) as largely unchanged in terms of domestic mill buying.
The lack of a rebound leaves the No. 1 HMS grade around $320 per gross ton to mills in the U.S., while shredded scrap trades at $380 or below and even prime scrap remains below $400 per ton.
The export market for HMS grades in August is faring little better, with West Coast shippers witnessing a $5 per metric ton drop in value and those on the East Coast watching prices drop by about $10 per metric ton compared with July.
The impact of China’s steel mills churning out product its own builders and manufacturers cannot consume is being felt in the Turkish export market this year, according to Davis Index.
“Most Turkish mills are uninterested in ferrous cargo purchases due to falling prices for imported billet from China,” writes the news and pricing service in mid-August. Davis Index also characterizes the end market for Turkish semi-finished and finished steel as “sluggish” and as not having improved sales prospects in sight.
On the supply side, two different processors who help manage multi-location scrap companies describe the United States supply and demand situation as in balance. Both also say they are unconvinced prices will rise anytime soon.
“Going forward, there seems to be a bearish tone to the market as there are several planned maintenance outages across a number of consumers in September and October,” says a processor with operations in the Midwest. “Future steel demand seems questionable, and the international prices are sliding,” he adds.
A processor with yards in the Western U.S. says the market is balanced, but not in a favorable fashion. “Supply is not plentiful; it has steadily reduced as seen in total quantities sold and shipped,” he comments. “They are both down.”
Although tight supply often sparks a rebound, the Western processor remarks, “The difference is that demand is also down. In that context, supply is in balance. If you look at most scrap yards, there is not a surplus of scrap inventories.”
Although neither export pricing nor demand may be considered to be booming, the Western processor says sellers and shippers near ports continue to benefit from the purchases that are being made.
“Export has been a godsend for scrap dealers as the prices have held steady for most of the summer,” he says. “That has prevented U.S. prices from falling further in a market of weak demand, but limited supply.”
He says Pacific Coast companies who can access bulk cargo export markets “would rather load a boat for export than railcars for domestic sales. The export price has supported those bulk export sales versus the freight cost to ship it inland to domestic consumers.”
Among the things preventing export prices from rising higher, as noted by Davis Index, is the overcapacity situation in China, where mills continue to pump out steel despite that nation’s construction sector now acting as a shadow of its former self.
That circumstance was decried in early August in comments accompanying the financial results of global steel producer ArcelorMittal. “China’s excess production relative to demand is resulting in very low domestic steel spreads and aggressive exports; steel prices in both Europe and the United States are below the marginal cost,” stated the company.
Courtesy : recyclingtoday.com
