ferrous scrap pile
Ferrous scrap trader Nathan Fruchter cites Egypt, Turkey, Greece, Vietnam and Bangladesh as among nations active in the late January export market.
Photo by Recycling Today staff.

Ferrous market could be poised for rebound

Sellers didn’t like prices in January, but overseas buyers are back in the market.

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January 14, 2022

After experiencing ferrous scrap prices with consistently upward momentum in 2021, the first buying period of 2022 proved stressful and not especially profitable for processors and sellers of ferrous scrap.

Metals pricing services showed export prices from the United States dropping up to $45 per ton and mill buying prices in the U.S. falling by an even greater amount in the buying period that typically concludes the 10th of each month.

A price drop was not completely unanticipated by processors and traders, but several indicated dissatisfaction with the steepness of the January curve. These market sources also indicate a belief that a February rebound is likely.

“Export markets dropped but have come up since with the rise in Turkey, and seem poised to increase further if the Kanto offer [bid by a Japanese buyer] has higher values,” a processor on the West Coast tells Recycling Today in mid-January.

The Kanto offer, reported by Argus Media, is among several export deals being reported on by trade publications including Argus, Fastmarkets AMM and Davis Index. Davis Index reports point to increased interest in U.S. ferrous scrap supplies by buyers in Bangladesh and Pakistan. That news service also reports increased import activity in South Korea and Vietnam, though the U.S. is not reported as the supplier of choice.

Nathan Fruchter of New York-based Idoru Trading Corp. tells Recycling Today the export demand is substantial and widespread, and scrap prices were already rebounding in active port regions of the U.S.

“The demand from the export market is there,” Fruchter says, though he makes a distinction between the bulk cargo market and the containerized sector. “Demand is there serving the bulk markets in Egypt, Turkey, Greece, Vietnam and Bangladesh,” he comments. “Business is there to be done and cargoes have moved.”

As has been documented by Recycling Today and well beyond, making bookings and following through on container shipping arrangements remains problematic, with Fruchter finding few reasons for optimism.

“On the container shipping side, containers remain in short supply,” Fruchter says. “It’s not a good situation for containers.” While container shippers continue to chase a future where the situation improves, Fruchter notes, “If one or more ports in China close down for another virus-related lockdown, that could screw up container shipping even more.”

The domestic ferrous market in January had problematic aspects of its own, with one source pointing to the behavior of large mill companies and their internal scrap processing networks as a factor.

A processor in the Great Lakes region says one mill-related company came in early in the buying period making bids around $70 per ton lower than December prices. Typically, the processor says, “I sell them a pretty good slug of heavy melting steel (HMS), plate and structural and magnetic steel turnings monthly.”

After receiving what he considered low offers, the processor says he “pulled it all off the table and moved it in other directions,” although still down some $60 per ton from December. The mill-related company later came back seeking HMS and plate and structural scrap, but by then it had been committed to other buyers.

Both the West Coast and the Great Lakes processor say scrap flows stayed healthy in December and early January, although supply issues (along with the container bottlenecks) may yet rear their heads before February negotiations begin.

In the East Coast export market, a large shredder operated in the Boston area by Schnitzer Steel Industries has been down after a fire in early December. Also in December, operators of other shredding plants voluntarily kept their shredders on low idle, whether to perform maintenance, give personnel holiday time off, or to maintain minimal inventory in the 14 states with a year-end inventory tax.

If buyers and sellers can reach an amicable price in February, however, supplies likely can be found. “It was our busiest December in the several years I’ve been here, taking in 30 percent more scrap in December than any of the previous six years,” says the Great Lakes processor.

The West Coast processor characterizes scrap flows in his region by saying, “Flows haven’t changed the last few months even though we’ve had some harsh winter weather.” Adds the Great Lakes region recycler, “The week between Christmas and New Year’s was very slow; things still are on the quiet side, but the pace is picking up and we are starting to get busier.”