NEW YORK Two West Coast bulk ferrous scrap sales to South Korea have sent U.S. export prices down for the second straight week.
Barely days after the results of a benchmark tender in Japan sent prices of containerized scrap tumbling (amm.com, Jan. 15), market participants said bulk sales suffered a similar fate.
Sources said two exporters each sold one bulk cargo to one of Koreas largest consumers at $385 per tonne c.i.f. Korea on a No. 1 heavy melt basis$23 per tonne lower than the price paid by the same consumer just before Christmas and about $9 lower than sales to Taiwan reportedly concluded earlier this month (amm.com, Jan. 13).
"The biggest influence was the Kanto tender," said one market participant, referring to a monthly benchmark tender released by scrap dealers in the Kanto region of Japan. The Jan. 15 tender was $17 below the previous month, instantly putting regional scrap prices under pressure.
"After that tender the market has really changed. The $23 drop in Korea will encourage buyers to try to drive down prices from Japan and Russia a little more since there is some more room between the Kanto tender and the Korean bulk deals," he said.
Sources familiar with the latest West Coast bulk sales to Korea said U.S. exporter offers first came in at $390 per tonne for No. 1 HMS, with one exporter reportedly offering the scrap at $410.
The cargoes reportedly traded at the Korean consumers bid of $385 per tonne, with one exporter booked for 45,000 tonnes of scrap and the second for 40,000 tonnes. Both cargoes will include a mix of heavy melt, shredded scrap estimated at $390 per tonne, and plate and structural scrap estimated at $395 per tonne.
A Korean market participant said prices needed to come down to engage Korean producers that are struggling to find demand for finished products. "There is no construction in Korea and no demand in Korea for rebar or HRC. I think first-quarter steel production in Korea will drop by about 10 percent," he said.