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| East Asian Scrap Import Market Set To Peak Out |
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There are signs that the ferrous scrap import market in East Asia is on track to peak out even though market conditions hold firm so far. On their part, buyers have become cautious about negotiating for new purchases in expectation of a market downturn, an environment in which offers at high prices are hard to go through. The following are how things stand in East Asia. Taiwanese import tender Taiwan's integrated steelmaker China Steel Corp (CSC) held its import tender Sept 1 to take the bonus grade of ferrous scrap. On offer to the tender are deepsea cargoes from major ferrous scrap exporters for shipment on the US West Coast and P&S scrap from Japan's trading companies. Among the major exporters are Sims Metal Management Ltd and Schnitzer Steel Industries Inc. Offer prices from the major exporters stand at a level of US$380-385/MT C&F for the bonus grade. Each cargo composition on offer breaks out as 70% P&S scrap and 30% HMS. P&S scrap offers from the Japanese trading companies go with prices in a range of US$385-390/MT C&F. As of Sept 2, there was no counterbid from CSC to the Japanese traders. As a result, CSC is thought to have prioritized negotiations with the major ferrous scrap exporters whose offer prices are lower than the Japanese traders' offer prices. The current offer prices of the bonus grade from the USA compare with the recent price settlement of US$375/MT C&F for delivery in South Korea of the bonus grade from Europe, given differences in unloading terms. Accordingly, it is understood that an upswing in the deepsea ferrous scrap market has slacked, if not has come down, according to market sources. Korean preference Japan's ferrous scrap export market for new deals has already turned downward in its basic tone. For an indicator, the price of No2 HMS is settled at Y29,500/MT FOB in the latest export deals for shipments to South Korea, which indicates a decline of Y3,500 (about US$38) from the recent peak of No2 HMS prices for South Korea. As a result, some South Korean electric steelmakers have begun to give priority to the procurement of Japanese ferrous scrap rather than negotiations to take deepsea cargoes. By comparison, China's buyers have yet to resume negotiations on new imports of ferrous scrap. Therefore, it is likely that the USA's ferrous scrap export market, too, will bear enhanced signs of a peak if Asian inquiries for US material continue stagnant. In this connection, export prices of containerized ferrous scrap from the US West Coast are edging down. Also, arrivals of ferrous scrap cargoes continue slack at the captive yards of ferrous scrap exporters. On the US West Coast, the current ex yard prices are stable at around US$240/LT for a cargo of 80% No1 HMS/20% No2 HMS. Some West Coast exporters are quoted as saying that they aren't pessimistic about the situation despite signs of quiet trading. They describe themselves as watching how things go after they have build up what they carry in stock. Containerized supplies for Taiwan Offer prices have come down to US$320-325/MT C&F so far for a grade of 80% No1 HMS/20% No2 HMS in containerized supplies of US ferrous scrap to Taiwan. But no firm deals are reported as buyers remain noncommittal. Among Taiwan's major electric steelmakers, Taichung-based Feng Hsin Iron & Steel Co has reduced what it pays for locally available ferrous scrap by NT$300/MT. |
| last modified : Wed 09 Sep, 2009 [10:32] |
