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US ferrous scrap exports shift to Asia

Keywords: Tags  ferrous scrap, scrap exports, HMS 1&2, scrap prices, Turkish demand, Asian shipments, Sean Davidson

NEW YORK — The U.S. bulk ferrous scrap export market took an unlikely turn this past week after one exporter abandoned traditional freight routes to manage the current demand environment.

With recent interest from Turkish mills dismal, one exporter has concluded bulk sales from the East and Gulf coasts to East Asia, AMM has been told.

East Coast exporters continue to seek prices of $405 to $410 per tonne c.i.f. Turkey for an 80/20 mix of No. 1 and No. 2 heavy melt. However, buyers for Turkish producers have bid around the $400-per-tonne level with no urgency in requirement.

The standoff has resulted in no new sales to Turkey since the first week of January and has encouraged one exporter to consider other markets.

Current East Coast bulk freight rates to Turkey are trending between $22 and $24 per tonne, with bulk freight rates from the Gulf Coast to Turkey about $5 higher.

The ability to ship from either coast to consumers in South Korea and Vietnam is possible only with a nearly $20-per-tonne differential in delivered prices to help cover the increase in freight costs.

A recent uptick in demand from East Asia, spurred by a rush to cover inventory before upcoming holidays slow market activity in the region, created just the right price environment to enable this atypical trade route, AMM has been told.

The West Coast market on Jan. 18 was abuzz with talk of two to three bulk cargo sales from the West Coast to Vietnam at a price of about $425 per tonne c.i.f.

However, AMM learned that there have been two bulk sales to Vietnam and one to South Korea. The sales to Vietnam were reportedly booked at an HMS 1&2 (80:20) price basis of about $430 and $437 per tonne, respectively. Both cargoes will carry a near-equal mix of heavy melt and shredded scrap.

The third bulk sale, to South Korea, traded at about $425 per tonne c.i.f. on an HMS 1&2 (80:20) basis.

Of the three bulk sales, only one will ship from the West Coast, while one will depart from the Gulf Coast and the third from the East Coast, one source told AMM.

With the last East Coast bulk sale to Turkey at around $407 per tonne c.f.r., the $18 to $30 price differential in delivered values to South Korea and Vietnam made both routes viable, the source added.

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