U.S. trade opinion expects November ferrous scrap prices to
increase significantly, especially for prime grades, according
to Sims Metal Management Ltd. vice president Blake Kelley.
economic conditions appear better than in recent months, and
steel production likely will remain at least at near-record
rates, although competition for steel sales is severe, Kelley
told delegates at the Bureau of International Recyclings
autumn conference in Warsaw, Poland, Oct. 28.
"Raw material sales
volume will be at corresponding levels. Prices may increase
further, especially as we move into months prone to seasonal
supply disruptions. In the end, scrap prices will remain
related to the cost of blast furnace iron; however, excess
capacity will continue to limit margins for steelmakers, miners
and scrap processors," he said.
Based on a nine-month
projection of World Steel Association data, the world will
produce 70 million tonnes more raw steel and 56 million tonnes
more iron this year than in 2012, while consuming 14 million
tonnes more purchased scrap.
In the United States,
prime grades traded between $400 and $420 per gross ton in
October depending on grade and location, while recent domestic
hot-rolled coil prices are around $733 per tonne ex-steel works
and imported hot-rolled coil offers are at $650 per tonne into
Houston, he said.
prices for reinforcing bar are around $711 per tonne "but
available for less," he said.
In his review of
international scrap markets, Kelley told delegates that
Chinas recent scrap import activity has been minimal due
to increasing domestic scrap supply while the material margin
between the sales prices of finished steel in China and their
raw material cost is "most likely the lowest in the world," he
said. In the coming months, steel and scrap prices could be
affected by Chinas "significant corrective efforts" aimed
at reducing pollution in the country, he said.
more bulk cargo exports to Southeast Asian countries like
Malaysia, Vietnam, Indonesia, and Thailand, but said
steelmakers definitely have "sticker shock," referring to the
recent spike in prices. A number of steelmakers are interested
in buying scrap but say they cannot afford to pay current
prices. Scrap in Thailand is trading at $370 per tonne
delivered mill, he said. The market will have to provide more
evidence supporting the price increases "to unchain their
demand," Kelley said.
In Taiwan, domestic
rebar and scrap prices are $578 and $385 per tonne,
respectively, he said. "This minimal material margin (of $193)
causes most steelmakers to run at full capacity to amortize
fixed costs as low as possible," he said.
Korean mills have remained active in the scrap markets.
"Domestic heavy melt scrap was recently forced down $9 to $340
per tonne delivered. Japanese H2-grade scrap has reportedly
been purchased at ... about $385 c.i.f. Korea," he said.
In India, a weak Indian rupee has caused the cost of
imported scrap to become more expensive. As a result, smaller
steelmakers without captive sponge iron or direct-reduced iron
have been forced to reduce output, he said.