NEW YORK Prices for containerized ferrous scrap exported
from the West Coast dropped again this past week, as market
conditions in East and Southeast Asia remained bleak.
Some Taiwanese mills are expected to cut back production as
they realign operations to battle a weak finished-products
market, several sources said.
Market participants reported containerized sales of an 80/20
mix of No. 1 and No. 2 heavy melt to Taiwanese mills in a range
of $370 to $375 per tonne c.f.r. during the week, while one
exporter reported a small-volume sale at $365 per tonne late
Taiwanese mills the prior week bid $380 to $385 for HMS 1&2
(80:20), with U.S. offers at around $390 per tonne, sources
said. That indicates a $15- to $20-per-tonne decline over the
past few weeks.
Taiwan has no choice due to poor finished sales,
the buyer for one Taiwanese producer said. Mills are
moving to two-shift operations, and some mills are not
importing scrap. Our last buying price was $370, and we are now
aiming for $365.
The lack of interest in finished steel sent local scrap prices
in Taiwan down $8 to $18 per tonne this past week, depending on
grade, and also forced a drop in scrap prices in South Korea,
Prices arent likely to fall much further, one U.S.
exporter believes. Ive seen this pattern over and
over, he said. Rebar sales drop, and Taiwan drags
the scrap price down until flow is impeded. Our last sale
prices were at $375. I suspect they will test lower next week,
as the rebar market is soft. Its hard to tell if
were at the bottom, or if there is more room to go down.
We are approaching the lower range of the historicals, so I
cant see it dropping much further.
A second exporter said that it was still too early to predict
whether $365 to $370 per tonne would be the bottom.
It will depend on other countries purchases to
determine if Taiwan can lower prices further, he said.
We are anticipating a $10 drop for April. Meanwhile,
volumes at scrapyards throughout the globe are very much down.
If supply continues to be slow, it will be difficult for
consumers overseas to lower pricing further.
A third exporter said that sellers resistance could
prevent prices for large-volume deals from dipping below $370
per tonne c.f.r. Taiwan.
(The) West Coast price is soft, but its not going
to move down below the $370 level, he said. I am
hearing some activity from Vietnam and Thailand these days, but
nothing solid. Flow is slow. No one is motivated to sell, and
everyone is waiting to see where this is going to go.
A fourth exporter had yet to hear of any trades at $370 per
tonne and said that low scrap inventory levels at Taiwanese
mills could help prevent further weakening. However, he
described the market as crazy and went on to say
that nothing would surprise (him) at this point.
A fifth exporter called the Southeast Asian market
dead. They have few billet or rebar
sales, he said. (The) only market with any good
activity is Malaysia, but due to their claims and
container-repair charges, they may not be a good market to go
into unless you are able to get a healthy margin.
Whats more, currency changes in Japan could also depress
West Coast prices, a sixth source said. When Japan
devalues the yen, I expect (West Coast) prices to drop even
faster, he said. The only thing holding up the
prices is the lack of scrap being generated, which goes back
around to demand for new steel. Without demand for finished
product, the mills dont need scrap to melt.