US ferrous price gains seem to have stalled

Overseas buyers are offering U.S. shippers from $10 to $30 per metric ton less for HMS.

steel recycling shredder
Whether scrap supplies are sufficient to meet domestic mill demand likely will be a discussion point between mills and recyclers in early April.
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After making $35 to $100 gains in value in early March, ferrous scrap in the United States appears to be closing out the month with backward momentum. In a reversal of the weather adage, the secondary commodity might have entered March like a lion but is poised to leave as a lamb.

In the week starting March 27, Davis Index reports lower bids for imported ferrous scrap coming from both Turkey and India. The global price tracking service has reported bulk heavy melting steel (HMS) buyers in Turkey were paying about $11 per metric ton less for their U.S.-sourced scrap during the last week in March compared with the prior week.

The Davis Index transaction log for U.S.-sourced HMS delivered to Turkish ports shows it hitting a recent peak of $462.25 per metric ton cost and freight (CFR) March 13, shortly after the monthly domestic mill buying price was established in the U.S.

Subsequently, buyers in Turkey have been bidding lower, with cargoes moving for $443.61 per metric ton CFR (down 4 percent) as of March 27.

Bulk HMS shipments to India are showing a similar pattern, according to Davis Index, as its list of HMS bulk purchases shipped to Nhava Sheva port near Mumbai shows a recent peak of $494.50 per metric ton cost, freight and insurance from March 8-13, roughly coinciding with U.S. monthly buying.

Since then, a steady decline in the value of bids has set in, with Indian buyers paying $459.50 CIF (down 7 percent) as of March 27.

Whether the early April domestic mill buying period can restore positive momentum to the market will be closely watched by scrap processors from roughly April 3 to April 10.

Steel output in the U.S. is largely stable, but not at a particularly strong level. Through March 25, production of about 19.88 million tons is down by 4.5 percent compared with the same time frame in 2022, according to the Washington-based American Iron and Steel Institute (AISI).

Year to date, mills in the U.S. are operating at a 74.1 percent capability utilization (capacity) rate, AISI says, which is down from a 79.7 percent rate in the first three months of last year.

Globally, figures gathered by Brussels-based World Steel Association (Worldsteel) show crude steel production for the 63 countries reporting to it has fallen by 1 percent in the first two months of this year compared with January and February of last year.

Unfortunately for the U.S. scrap market, two of the only three large nations with increased output are China and Iran, which buy little or no scrap from North America. Output in India, however, is up 1 percent.

Along with the decline in domestic output, the U.S. scrap market is selling into a Turkish steel sector that has produced 23.1 percent less steel thus far in 2023 compared with last year. That nation’s output in February was affected in part by earthquakes that struck a steel-producing region of Turkey.

As domestic mill buying in the U.S. gets ramped up in early April, a factor influencing pricing will continue to be the state of scrap supply.

As of the second week in March, one processor in the Great Lakes region tells Recycling Today ferrous scrap inflows at regional yards are down by 20 percent to 33 percent this year, by his estimate.  

A processor in the Midwest says scale traffic eventually improved in mid-March thanks to better weather and pricing. However, he says that improvement is in comparison with a miserable previous month, not in comparison with March of 2022.

As buyers and sellers enter negotiations in early April, both the lower overseas bids and the relative scarcity of scrap on the ground are likely to be talking points.

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