NEW YORK A lone bulk ferrous scrap sale from the West Coast to China this week is encouraging, but it could be the last on the wave of higher prices as East Asian mills are poised to finish replenishing inventories, some market participants said.
A rush by mills in Taiwan and China to secure scrap after ending up short on inventories led prices to rise rapidly by $30 to $40 per tonne over the past few weeks, sources said.
The West Coast market has struggled to secure a steady flow of bulk exports over the past few months, relying instead on shipments of containerized scrap.
Sources said the bulk sale, shipped on a vessel carrying only shredded scrap, was made at around $400 per tonne. Meanwhile, containerized scrap exporters reported trades as high as $380 per tonne c.f.r. Taiwan for an 80/20 mix of No. 1 and No. 2 heavy melt.
The increase in export tags also forced exporters along the West Coast to raise buying prices at their yards by up to $20 over the past few days as they look to secure scrap for tonnes committed over the past few weeks, market participants said.
One source called the rise in export prices off the West Coast a "short-term" development.
"It appears to be a short-term dilemma that has forced up the scrap price in efforts to secure enough melt feedstock," he said.
"Those (Asian) mills returning to the market were unable to secure sufficient quantities of scrap to meet their sales needs. The dilemma is that the sale price on rebar is not rising enough to justify increasing scrap prices. Over the last month, there appeared to be a concerted effort to drive down scrap prices in Asia that obviously affected scrap inflow levels," he said.
A second source agreed. "Certain mills got real low on inventory. I dont expect it to last long and believe it is already over and will remain steady and drop a bitmaybe next week or the week after," he said.
News that Taiwan had concluded a number of bulk deals with Japan left the source more concerned. "So, it might get softer sooner than I thought," he said.
Containerized HMS 1&2 (80:20) was sold to Taiwan in a range of $360 to $380 per tonne c.f.r. over the past week, other sources said.
Sales of the same scrap grade to South Korea were reported in a range of $355 to $360 per tonne. While sales to Vietnam were in a $385- to $390-per-tonne range, sales to Thailand were at $365 to $370 and sales to Malaysia were at $385 to $390 per tonne.
"I think the Asian as well as the Turkish mills let the inventories drop too low. Increased activity caused a price increase. Also, there is not a lot of scrap available," a third source said.