NEW YORK Ferrous scrap export activity has finally picked up momentum on the West Coast after several weeks of lackluster sales, with at least six bulk cargoes reportedly sold in the past week.
Market participants said that at least five cargoes were sold to China and South Korea in addition to a bulk cargo sale to Taiwan (amm.com, July 16).
Four bulk cargoes were sold to a single consumer in China at a price basis of around $362 per tonne c.i.f. China for an 80/20 mix of No. 1 and No. 2 heavy melt. Some sources said they believe the price for at least one of those cargoes was as high as $365 per tonne on an HMS 1&2 (80:20) basis, which others believe actually reflected a composite price of heavy melt and shred and not the heavy melt price.
The Chinese mill reportedly was in the market for a few weeks with bids at $350 to $355 per tonne but was forced to conclude at much higher prices after sellers refused to engage the low bids, according to one market participant.
In addition to the sales to China, one consumer in Korea opted not to engage in the Japanese scrap market and turned its attention to U.S. scrap, sources said. Korean demand for U.S. scrap plummeted over the past few months after a change in the value of the Japanese yen made Japanese scrap far more viable.
Although the reasons are still unclear, at least three mills reportedly have turned toward the U.S. once again for scrap. A Korean consumer that picked up a bulk cargo in late June at $355 per tonne c.i.f. Korea on an HMS 1&2 (80:20) basis reportedly is soliciting offers along with a second major consumer. U.S. offer prices to Korea are now at $370 per tonne for HMS 1&2 (80:20), according to several sources.
The $370 price offers are well above this past weeks sole U.S. sale to a different consumer in Korea at $365 per tonne c.i.f. Korea for HMS 1&2 (80:20) and $370 per tonne for shred.
A source at a fourth Korean consumer said offer prices were as high as $375 per tonne, with containerized scrap offers at $345 per tonne.
One U.S. exporter said he was relieved to see the market rebound in price and demand, while a buyer said it was still unclear how much further prices would increase from the current $362- to $363-per-tonne level.
Sources said there were rumors of at least two more sales to Korea, although none could confirm any details. A second exporter suggested it could be a case of "double reporting" by market participants.
A third exporter said the recent sales indicate that the market has bottomed.
Aside from the market still trying to determine why Korean mills are looking away from Japanese H2 scrap, there appears to be equal uncertainty about the reasons for the turnaround in interest from China.
"I dont really know whats specifically driving this increased demand," the third exporter said, although a better-than-anticipated economic report from China could have encouraged some steel producers to reconsider their previously pessimistic strategies.
"Rebar inventories were drawn down every week for the past few weeks. Iron ore is up. The gross report out of China wasnt as bad as people thought it would be. They thought it would be bad so they didnt buy scrap. So scrap inventories were down. Now, if they expect market conditions to improve they have to start buying scrap," he said.