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Container scrap prices tick up on West Coast

Keywords: Tags  container scrap, scrap exports, ferrous scrap, HMS, Taiwan, Sean Davidson

NEW YORK — A modest recovery in prices of containerized ferrous scrap exported to countries like Taiwan has brought some optimism to an otherwise bearish market eager for any positive cue.

West Coast market participants said export prices to Taiwan bottomed and then gained a few dollars Feb. 26 as Taiwanese mills looked to fill depleted scrap inventories.

Large-volume exporters reported sales of an 80/20 mix of No. 1 and No. 2 heavy melt in a range of $338 to $340 per tonne c.f.r. Taiwan, up from $335 to $338 two weeks ago (, Feb. 14). Some traders said containerized HMS 1&2 (80:20) had sold in a range of $330 to $338 per tonne c.f.r. Taiwan leading up to Feb. 26, when reports of higher-priced trades trickled in.

"We sold containers today at $339 (per tonne). We appear to have reached the floor and bounced back a little," one exporter said Feb. 27, adding that he felt domestic prices along the West Coast also could improve as a result. "What was being talked down $10 to $20 last week is now down $5 to $10. A lot of bulk sales in the past 30 days have cleared some of the February overhang. ... I think the March market will be tighter than anticipated," he said.

A second exporter said container export prices to Taiwan had regained some lost ground after mills in the country raised their buying prices for domestic scrap by as much as $7 per tonne this past week.

Some sources said it was too early to call it a rebound.

"I don’t see it as a rebound—all markets are searching for a bottom. Given we are at the end of February, the export market will react to the U.S. domestic March market, which is expected to fall $10 to $30 per gross ton," a third exporter said. "I think this week’s container prices were slightly higher than last week, but this was probably driven by exporters trying to force a bottom in order to influence the U.S. domestic March market."

Other exporters, however, said prices strengthened because Taiwanese mill buyers were unable to secure large volumes at the lower prices but were not sure the uptrend would hold for long.

"After the initial surge of material in a down market, the reduced pricing results in lower scrap volume," a fourth exporter said. "Mills are driving volume by working on thinner margin vs. a real surge in demand."

A fifth exporter said some Taiwanese mills did not buy enough scrap "at the last peak or they pulled back too early and their inventories have shrunk. The order books don’t show that there is a greater demand for finished goods right now. This seems to be how this market is now—up and down waves."

Meanwhile, smaller-volume exporters said they were yet to receive prices above $335 per tonne and felt the market is still weak.

A Japanese trader said market participants he had contacted feel the market is at the bottom and could rebound to some extent in March unless bulk deep-sea cargo prices fall from the current market prices.

In the bulk market, a second trader said mills in Vietnam and Malaysia have bid between $360 and $365 per tonne c.i.f. for HMS 1&2 (80:20), with Indonesian bids reported at $370 per tonne.

A Taiwanese mill buyer confirmed the latest developments and said that exporters had raised offer prices to a range of $340 to $345 per tonne.

The buyer said that his mill would watch iron ore prices for a few days before deciding on its next purchases. "We will just wait and see this week as we found the iron ore prices fell to below $120 per tonne again," he said.

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