NEW YORK Prices for containerized ferrous scrap exports to Asia were mixed this past week as tags into some critical markets dropped while others held steady.
News of a U.S. bulk cargo sale to Thailand at higher prices did little to prevent declines in tags for container exports into Taiwan and South Korea, with market participants reporting a retreat in demand from two of the regions largest importers of scrap.
Taiwanese mill buyers, Asian traders and U.S. exporters reported sales for an 80/20 mix of No. 1 and No. 2 heavy melt in a range of $350 to $355 per tonne c.f.r. Taiwan this past week, down $5 per tonne from earlier levels.
With steel production in Taiwan set to drop by around 30 percent starting May 10, many speculated the weakness could continue.
"Demand is down a lot. The last price we have is $350 (per tonne), but it will go lower," a buyer for one Taiwanese producer said.
"Demand is down because both rebar sales are down and (the) summertime electricity cut starts May 10. Production will drop to two shifts instead of three shifts. So down 30 percent in production drops import scrap demand by 60 percent," he said, noting that since Taiwans scrap needs are split 50-50 between domestic supplies and imports, a 30-percent drop in production will have a larger impact on scrap imports since mills will prefer domestic supply.
"Even though the news has been indicating an upward trend on markets with upward pressure from U.S. suppliers, our Taiwan buyers have been holding off new orders and watching the market. Summer is around the corner and I think it will bring prices down slightly, especially with electricity limits starting in Taiwan in May. Prices dropped this (past) week by roughly $5 to $7 for us," one exporter said.
A buyer for a second producer in Taiwan said he expected prices to soften further following an increase in volume offers by exporters this past week.
Taiwan might face a tougher challenge in pushing prices down, despite overall market sentiment, a second exporter said.
"I think Taiwan will try to bring the price down; Im just not sure theyll be able to. Theyve wanted to bring the prices down for the last three weeks and have been unable to do so. Part of it will depend on where the U.S. market goes. HMS export container sales are going off sideways again. ... Taiwan rebar sales are slow, but so is their local scrap availability," he said.
Looking at other Asian markets, a third exporter said he expects export volumes from Japan to Taiwan and Korea to drop in May, which could support higher scrap pricesa view supported by one Japanese exporter.
"Japanese electric-arc furnace mills cut their production in April by 10 to 20 percent as demand for steel products fell in reaction to a consumption tax that changed to 8 percent from 5 percent on April 1. As a result, some Japanese scrap shippers accepted little discounts requested by Korean mills," a trader for a Japanese scrap company said. "But most scrap dealers think this trend is temporary and that the scrap market will increase again by the end May or early June when demand for steel products picks up."
Korean mills had also lowered prices in step with the decrease in prices to Taiwan, exporters said, while others said prices into other countries such as Thailand and Vietnam held steady.