Costs, lack of ships keep more US scrap at home

Oct 15, 2007 | 12:52 PM | Michael Marley

Offshore sales of ferrous scrap might be wavering, some U.S. exporters say, but don't blame demand. The lack of available ships at reasonable ocean freight rates is the main problem.

Prices paid by Turkish steelmakers to export yards in Western Europe have fallen by about $7 a tonne to $336 a tonne from the $343 paid to U.S. exporters a week earlier. That price decline only served to further dismay some U.S. exporters and traders.

"We can't sell much to the Turks because we can't get any ships to carry the scrap," an East Coast trader said, adding that bulk cargo carriers have increased their rates by between $5 and $10 a tonne in recent weeks.

"Even if we could get ships," another East Coast exporter said, "I doubt that it would make much sense to book a sale now." Most of the bulk cargo scrap exporters would be selling at a loss, given what they are paying the smaller local yards that are their main suppliers, he said. Prices paid by major East Coast export yards for No. 1 heavy melting steel scrap were said to range from $225 to as high as $260 a tonne at their scales, and ocean freight costs are now about $80 or $90 a tonne to the eastern Mediterranean ports, so export yards would barely break even at those prices before adding the cost of actually loading a vessel.....