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Prices for container scrap into Taiwan up again

Apr 03, 2014 | 07:21 PM |

Tags  scrap, ferrous scrap, scrap prices, HMS, heavy melt, Sean Davidson

NEW YORK — Export prices for containerized ferrous scrap shipped to Taiwan rose for the third week in a row amid supply concerns and higher offers from major exporting countries such as the United States and Japan.

Despite gains this week, prices into Taiwan are likely to peak in the coming week or two as speculation of significantly higher domestic prices in the United States in April appears to have been too optimistic, market participants suggested.

Sources said containerized shipments of an 80/20 mix of No. 1 and No. 2 heavy melt sold to Taiwan in a range of $350 to $355 per tonne c.f.r. Taiwan, up $5 from a week earlier (, March 26).

Some export offers are already at $355 to $360 per tonne, but trades have yet to materialize in that range.

"Scrap availability has been the driving factor, although that market may be peaking. There’s a lot of uncertainty in the market," one U.S. exporter said. "HMS export containers have sold predominantly at $355 this week. Domestic has slowed here. The anticipated up market is now settling sideways with fewer buys."

A move by domestic mills to bring Taiwan’s domestic buying prices and import tags to the same level was another reason for this week’s price rise, a Taiwanese importer said, noting that offering domestic suppliers the same price as exporters to Taiwan should encourage local suppliers to ship more scrap.

"Mills raised domestic scrap prices by $10 earlier this week, which implies they have great intention to buy from domestic. U.S. and Japanese scrap are too expensive, but the mills still need the materials. So they had no choice but to increase purchasing prices to a $350 to $355 range. But they have only bought small quantities since this level is too high for them," he said.

"There will be electricity rationing from May in Taiwan and South Korea, so mills’ operating cost will rise. The scrap demand will go down and the supply will go up due to better supplies from warmer weather. Then the price will drop," he added.

Increased scrap export prices to Taiwan also helped boost pre-freight prices along the West Coast, with suppliers reporting HMS 1&2 (80:20) in a range of $330 to $335 per tonne f.a.s. Los Angeles and $315 per tonne f.a.s. Seattle.

A third market player was confident prices would soon come off current levels once Taiwan’s mills have secured their immediate needs.

"I feel it’s speculatively raised, as there are no signs of improvement in steel product demand. Also the Southeast currencies are not favoring imports," he said.

"(The market) might mellow out, as rebar sales are still not good in Taiwan. They were just caught short on scrap while Korea is still working down ... large inventories of scrap," a buyer for one Taiwanese producer agreed.

Another exporter expects prices to soften in the coming weeks as U.S. suppliers will be forced to book sales for collected scrap. "U.S. domestic scrap prices didn’t increase so much and suppliers on the West Coast are under pressure of inventories due to limited space to hold scrap. Scrap from the West Coast can only sell to Asia," he said.

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