Exporters on the US East Coast slashed ferrous scrap buying prices at the docks by as much as $20 per gross ton in less than a week - and warned of possible future reductions due to expectations that the next US bulk sale to Turkey will occur at lower prices.
Exporters on the US East Coast slashed ferrous scrap buying prices at the docks by as much as $20 per gross ton in less than a week - and warned of possible future reductions due to expectations that the next US bulk sale to Turkey will occur at lower prices.
US exporters aggressively reduced dock buying prices across all grades at three major East Coast hubs this week, with market participants in Boston taking the hardest hit.
"I don't think this is the end [of the price decline]. One of the exporters will drop prices and the rest will likely follow suit. The reason they gave us was that the export market is weakening and the next negotiated sale to Turkey out of the US will be closer to the $300 [per tonne cfr] level," a seller to the Boston docks said.
Exporters in Boston have mirrored each other's movements and acted quickly to match price cuts, driving a steeper decline than was seen in the docks located south of New England. The New York and Philadelphia ports were less heavy-handed with their price reductions, but market participants have been warned of additional declines.
"Drops are coming fast and furious. [The exporters] are greasing the slide as there isn't any activity or bulk buying to stop the [price fall]. Good news is that the bigger the drop is, the quicker and bigger the bounce will be," a seller to the New York docks said.
The average price for No1 heavy melting scrap in Boston fell by $20 to $240 per gross ton on Wednesday December 12, according to Fastmarkets AMM's assessment. The average prices for the same material at the New York and Philadelphia ports dropped by $10 to $260 per gross ton in both regions.
Meanwhile, only one cargo was confirmed to have sold from the US over the past seven days. A West Coast cargo containing 45,000 tonnes of HMS1 was sold to a South Korean producer at $325 per tonne cfr on December 10.
That price is off $10 per tonne from a West Coast cargo booked by the same producer 12 days prior at $335 per tonne cfr for HMS 1&2 (80:20).
Global ferrous scrap prices caved under the weight of falling Chinese semi-finished billet prices last month. Billet prices have since rebounded, but ferrous scrap export prices have continued declining. One exporter source said the outcome of upcoming US-China trade talks will likely determine the near-term direction of global scrap prices.
"Flip a coin. It all depends on what China does with America. [Prices] could become softer or come back with a vengeance," the exporter said of the uncertainty currently underlying the market.
Fastmarkets' weekly West Coast ferrous scrap export index for heavy melt fell to $295 per tonne fob Los Angeles on December 12, down 3.3% from $305 per tonne fob on December 5.
Turkish steelmakers have not booked a deep-sea cargo since December 5, when a mixed European cargo containing HMS 1&2 (75:25) was secured at an average price of $304 per tonne cfr. Despite the inactivity, sources estimated that Turkey still needs 250,000 tonnes of scrap for December and 600,000 tonnes for January.
Some sources argued that Turkey's export rebar price is too low - and unsustainable unless billet and scrap prices decrease.
On December 6, Fastmarkets assessed the price for Turkish rebar exports at $470-480 per tonne fob, while Fastmarkets MB's daily Commonwealth of Independent States export billet index stood at $431 per tonne fob Black Sea - indicating $44-per-tonne price margin at the midpoint. That spread is insufficient and cannot support the $50-per-tonne billet to rebar conversion cost, sources told Fastmarkets.
"These numbers are not even relevant because the Turks are not even booking rebar now. They are merely throwing numbers around knowing that they are entering the slow season," the exporter noted.
Lackluster rebar export sales have triggered talk of possible rebar production cuts at several Turkish mills in the first quarter of 2019, which further shook market sentiment. Yet the exporter remained unfazed, noting that the production curtailment is merely temporary.
"[Turkey] might cut rebar production, but construction in Turkey is dead in January. Fundamentally, everything is still okay, and [production] will be back by the spring," the exporter said.
source: fastmarket |
