NEW YORK A late surge in sales for reinforcing bar in Taiwan has stopped a nearly weeklong decline in scrap prices to Taiwanese mills, AMM has been told.
Falling iron ore prices in China on March 10 and March 11 sparked a decline in domestic scrap prices across several Asian markets, including China, Japan and South Korea, with export prices to Taiwan expected to drop as sentiment soured across Far East Asia.
Containerized export prices for an 80/20 mix of No. 1 and No. 2 heavy melt to Taiwan fell to around $340 per tonne c.f.r. Taiwan March 13, market participants said, after previously trading at $345 to $347 per tonne c.f.r. Taiwan.
Working off these cues, Taiwanese mills pushed bids to as low as $330 to $335 per tonne, several exporters said.
However, an estimated 120,000 tonnes in rebar sales one day later at $540 to $550 per tonne put a freeze on declining scrap prices and prompted scrap exporters to withdraw offers, AMM has been told.
The low was $340 (per tonne), but there was a surprise flurry of rebar sales. That put a quick floor on the market, and offers were quickly pulled back. I suspect that the prices will be back up (starting March 17) on that basis, one exporter said, speculating that prices could return to the $340- to $345-per-tonne level.
Taiwans mills reportedly booked large volumes of scrap from March 10 through March 13 as softening prices attracted more demand.
A buyer for one mill estimated that the country booked 60,000 to 70,000 tonnes of heavy melt scrap from Japan at $340 to $342 per tonne this past week.
The large tonnage booked from Japan hurt U.S. export sales volumes to Taiwan, a second exporter said.
But many market participants speculated that any uptick will likely be short-lived as longer-term fundamentals look bleak for various reasons.
The mood is very somber in Asian markets for scrap purchases. This is mainly due to weak Chinese export numbers for finished steel, some big mills in China shutting down and Chinese banks tightening liquidity, another exporter to the region said. The economy that used to drive the markets is now wholly responsible for pulling it back.
A fourth exporter is expecting softer iron ore prices to be more attractive to steel producers who can switch between scrap and iron, he said.
I see mills that do not depend only on scrap jumping to iron ore or other raw materials to compensate. We will see less demand for scrap due to the drop in iron ore prices. However, short term, I see scrap firm where it is now or a slight increase. Once summer hits, I expect a down trend again, he said.
One trader suggested that exporters will be forced to rely on countries such as Taiwan, South Korea, Vietnam and Indonesia for demand, as he expects Chinese demand to be minimal this year.
I predict the Chinese scrap market will maintain the lowest price level among all Asian countries for a long time, he said.