Bulk may be too big for mills in emerging economies

Jul 01, 2008 | 06:02 AM |

The ferrous-scrap-in-container segment of the scrap metals export market has run into some rough seas in recent months.

"It's getting harder and harder to get a container aboard a ship," one West Coast scrap executive said. Grain, fertilizer and other products that bring better revenue and cause less damage to the sidewalls of containers are getting priority spots on container ships these days.

Both the big export yards and the smaller yards are having the same problem, and many of the smaller shippers are particularly anxious to sell because they fear they might be left sitting on expensive scrap if prices start to decline.

The West Coast executive said his yard is booked through June on bulk cargoes of ferrous scrap to steelmakers in Asia, largely because worldwide demand for ferrous scrap is strong and freight rate increases for containers have added a little flexibility to the market. It is still more expensive on a per-tonne basis to use, say, a 30,000- to 35,000-tonne handy-sized vessel, which has a freight rate to an Asian port of $70 to $80 a tonne while container rates are about $50 a tonne. The equalization is on the destination end, where containers often have to be off-loaded onto trucks and railroad cars to be delivered to a mill that is far away from a port. That can add as much as $20 a tonne....