by Stuart Burns on APRIL 20, 2016
Steel scrap prices have been on a rebound this year, along with iron ore and many other commodities, scrap prices have picked up in major market Turkey.
The Steel Index (TSI) put this down to stronger demand from Turkish mills and a squeeze on supplies. Low steel prices have resulted in low scrap prices, particularly in major exporter the U.S. The resulting lack of supply has created a tighter market. At least for awhile.
In Asia, prices have picked up in, particularly in Taiwan where imports of HMS #1&2 80:20 increased $23 a metric ton to $247 per mt at Taiwanese ports last week.
India Not Buying Increases
In India, TSI’s containerized shredded index for Indian imports rose $25/mt to finish the week at $263/mt at the CFR Nhava Sheva port. Indian buyers, though, have not committed to the market in a big way, drawing on domestic stocks in part because they do not see the price increases as sustainable.
U.S. prices, though, have been more lackluster showing just a small $2/mt uptick according to the TSI, more a reflection of increased west coast exports and lack of steel scrap arisings than any strength in the market.
Iron Ore Competition
Low iron ore prices, though, have largely replaced scrap demand in China, decimating imports of ferrous scrap.
Scrap inventory has built up at scrap yards in the U.S. and Europe as processors have faced weak markets. There appears little shortage of unprocessed metal, given that this could come through the system if demand and or prices picked up any significant strength in the market could ease in Q2.
The steady decline in volumes and prices is forcing consolidation in the U.S. market and some have voiced concerns about the future of domestic recycling. With electric arc furnaces steelmaking such a dominant production route in the U.S., the supply market will, in part, be supported by vertical integration from steelmakers but recycling is a fragmented business and further mergers, rationalization and consolidation is probably inevitable as export prospects remain subdued, not just for months, but probably the next few years.
Source: MetalMiner