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W. Coast scrap export prices drop again

Keywords: Tags  ferrous scrap exports, export prices, Taiwan buyers, South Korea buyers, Far East demand, scrap offer prices, scrap, Taiwan South Korea

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 March 22.

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, he added.

Prices aren’t likely to fall much further, one U.S. exporter believes. “I’ve 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. It’s hard to tell if we’re at the bottom, or if there is more room to go down. We are approaching the lower range of the historicals, so I can’t 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 it’s 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.”

What’s 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 don’t need scrap to melt.”

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