US containerized ferrous scrap export indexes dropped for the third successive week on Thursday amid a shortage of containers and high freight costs across both coasts. Large buyers have adopted a wait-and-see approach and sellers anticipate a surge of export interest in the next two weeks as the US market gears up for its early month domestic trading week and Asian markets gain clarity.
Earlier this month, the domestic US ferrous scrap market was expected to trend down by $10-20/gt on secondary grades such as #1 HMS and shredded against March settled prices in most regions, excluding Texas. The sentiment has moved to a deeper loss of $30-40/gt on the same grades this week, with prices for primes also potentially trending down depending on the region.
Primes such as #1 busheling were initially expected to trend sideways to up $10/gt on some deals due to limited supply but the production suspension at auto plants may limit the prime volume buys on the supply chain effect.
Large Asian buyers, who are waiting for global commodity indication from the bulk buying prices by Turkish mills, are anticipated to prefer bulk deals over containers when their import activity resumes.
Importers have adjusted bids downwards after Tokyo Steel in Japan and Hyundai Steel in South Korea decreased domestic ferrous scrap buying prices. Large mills are negotiating bulk scrap buys now.
Bangladesh and Pakistan markets are encountering buying interest amid domestic recovery while imports to India are slow. Indonesia and Malaysia may also return to container purchases in early April. Several large Indian buyers noted they were not making inquiries this week as the offer prices were too high for their deal goals. Indian buyers are expected to return next week.
In New York, the weekly Davis Indexes for containerized scrap fell by $1-11/mt against price erosions of $18-27/mt in the prior week. The index for #1 busheling declined by $11/mt to $401/mt fas while P&S 5ft dropped by $9/mt to $382/mt fas and shredded decreased by $8/mt to $380/mt fas. The indexes for HMS 1&2 (80:20) decreased by $1/mt to $370/mt fas and machine turnings declined by $3/mt to $335/mt fas.
The weekly Los Angeles containerized scrap indexes declined by $8-10/mt after falling by $19/mt in the prior week, with #1 busheling down by $8/mt to $368/mt fas, HMS 1&2 (80:20) dropping by $10/mt to $343/mt fas, and both P&S 5ft and shredded slipping by $9/mt to $360/mt fas.
Market participants note that prices in Los Angeles around the index level are available but pending the availability of containers for booking. Several participants believe that prices have reached a bottom on slow buying and the return of inquiries next week may support improved export prices.
San Francisco’s weekly indexes fell by $12-15/mt this week. The index for #1 busheling, HMS 1&2 (80:20), and P&S 5ft all decreased by $15/mt to $360/mt fas, $335/mt fas, and $353/mt fas, respectively. Shredded fell by $12/mt to $353/mt fas.
In Seattle, the Davis Indexes decreased by $10-13/mt this week. The index for #1 busheling fell by $13/mt to $370/mt fas. HMS 1&2 (80:20), P&S 5ft, and shredded all declined by $10/mt to $343/mt fas, $360/mt fas, and $358/mt fas, respectively.