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W. Coast scrap prices slide on Japanese cues

Keywords: Tags  ferrous scrap, containerized scrap exports, HMS, heavy melt, Tokyo Steel Manufacturing. Sean Davidson

NEW YORK — Sliding ferrous scrap prices in Japan have had a knock-on effect on West Coast containerized ferrous scrap export prices to Taiwan.

News that Tokyo Steel Manufacturing Co. Ltd., Japan’s largest electric-arc furnace operator, lowered its buying prices for the second time in four days—a total drop of $10 per tonne—was followed by the results of a benchmark monthly tender in Japan that shaved around $17 per tonne from December prices.

Far East and Southeast Asian markets use the rather transparent benchmark set by Japan to influence their own trading decisions. The double blow from Japan pushed U.S. containerized ferrous scrap export prices to Taiwan down between $5 and $10 per tonne Jan. 15, market participants said.

One Taiwanese producer lowered its domestic scrap buying prices by $7 per tonne Jan. 15, just two days after announcing it had left its scrap prices unchanged.

Sources reported transactions of an 80/20 mix of No. 1 and No. 2 heavy melt to Taiwan in a range of $355 to $360 per tonne c.f.r. Taiwan, down from $365 to $368 per tonne previously.

Taiwanese buyers have mostly stepped away from the market, sources said, as news of falling pig iron prices in the region raised uncertainty on scrap prices. Markets also are preparing for the region’s Lunar New Year holiday slowdown.

"All (Taiwanese) buyers are sitting on their hands hoping to see a $345 to $350 market," one exporter said.

Weaker rebar sales in Taiwan contributed to lower scrap prices, according to a second exporter.

Apart from Taiwan, most sources said there was little to no interest from Chinese buyers, who reportedly are bidding $340 per tonne for containerized HMS 1&2 (80:20).

"China is out. It will be rather quiet until after the Chinese New Year (holiday). In Asia, scrapyards tend to clean out inventory prior to the Chinese New Year to collect cash for the New Year and pay bonuses. After the Chinese New Year, it is supposed to be the peak demand period," a buyer in the region said.

Sources reported prices in Vietnam in a range of $365 to $378 per tonne for heavy melt, with South Korea at around $365 per tonne and Thailand $10 lower.

"I think it is kind of a who-blinks-first situation: dealers or overseas consumers. I also would not be surprised to see further softening from China and Taiwan because we are heading into the Chinese New Year, which is historically a very quiet time for trading," a third exporter said. "Depending on how much volume gets traded at lower levels, it will be interesting to see what happens in mid-February, after the Chinese New Year."

U.S. market participants said bulk exporters announced a $10-per-gross ton drop in buying prices Jan. 15, but there was no confirmation of whether dealers accepted the lower prices.

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