18. JAN 2011
Demand for U.S. ferrous scrap by Turkish steelmakers has leveled off in the past week, but sales to steelmakers elsewhere in the Mediterranean and the Far East continue at a steady pace, industry sources said.
One trader said Turkish mills have not bought a single cargo from U.S. suppliers in the past week, although most East Coast and Gulf Coast export yards remain active filling tonnages bought earlier in the month and in December.
U.S. exporters are seeking between $510 and $515 per tonne for the 80/20 mix of No. 1 and No. 2 heavy melting steel scrap and an extra $5 per tonne for shredded. Freight costs to Turkey from the East Coast are said to be averaging about $33 per tonne, making the f.o.b. prices from U.S. ports around $477 to $482 per tonne for heavy melt.
"Turkish buyers seemed to be hesitant as they approached the $500-per-tonne (delivered) mark, but once they crossed it they didn't seem to have much trouble paying that price and more for the scrap they needed," another East Coast exporter said.
The higher tags have spurred exporters to boost their offering prices to local suppliers and to reach further inland for material. Local suppliers are said to be getting between $425 and $430 per tonne for No. 1 heavy melt, while yards in western Pennsylvania and New York and eastern Ohio are said be getting as much as $460 per tonne, in part to offset higher freight costs from those regions but also to draw material away from steel mills in those regions, which are paying about $440 per long ton (around $433 per tonne) for No. 1 heavy melt.
Some U.S. scrap exporters said they are not troubled by the inactivity of Turkish buyers. Mills in Egypt, Greece and Italy have stepped up to fill the void, and one trader said that most exporters expect Turkish steelmakers to be back in the market buying scrap within the next week.
"I don't think you'll see the Turks stay out of the market for long. We expect to see them back and buying in the next week or two. In the meantime, we're getting inquiries from steel mills elsewhere in the Mediterranean," the trader said.
Meanwhile, U.S. scrap shippers on the West Coast have booked about six cargoes to South Korea and another six to China, by one industry member's estimate.
Prices paid by Asian mills match the offers being made to their Mediterranean rivals—about $510 per tonne delivered for the heavy melt grades and $515 for shredded. Bulk cargo freight costs are about $33 per tonne to South Korea, on par with ocean freight cost to Turkey, but are slightly higher to China and elsewhere in the western Pacific, a West Coast trader said.
Demand from the Far East is expected to remain steady for the rest of this month ahead of the Chinese New Year, which begins Feb. 3.
Shipments to foreign steel mills dipped to 1,978,313 tonnes in November, down 0.7 percent from 1,992,848 tonnes the previous month, according to the latest statistics from the U.S. Department of Commerce, despite a sharp spike in exports to Turkey and a second strong month of sales to India.
Turkey bought 465,553 tonnes from U.S. suppliers, up 34.5 percent from 345,886 tonnes in October, pushing the year-to-date total to 3,802,165 tonnes, 17.2 percent ahead of 3,243,870 tonnes in the first 11 months of 2009.
India boosted its November intake to 128,512 tonnes, up 7.1 percent from 120,020 tonnes in October and more than double the 62,000-tonne pace seen from March through September. Nevertheless, India's year-to-date imports of 918,115 tonnes were down 38.4 percent from 1,490,038 tonnes a year earlier.
Taiwan posted a modest gain in November, with its imports inching up 4.2 percent to 283,746 tonnes from 272,218 tonnes in October and raising its 11-month intake by 23.3 percent to 2,503,258 tonnes.
But several other key scrap-importing nations registered steep cuts in November, offsetting the gains of Turkey, India and a handful of smaller ferrous scrap-poor nations. South Korea cut its buying almost in half, with its imports tumbling 48.5 percent to 155,774 tonnes from 302,433 tonnes in October; Malaysia's purchases plunged 97.8 percent to an anemic 1,310 tonnes from 60,090 tonnes; and shipments to China dipped 1.1 percent to 374,867 tonnes from 379,167 tonnes.
Closer to home, Mexico sliced its purchases 44 percent to 52,180 tonnes in November from 93,138 tonnes the previous month, while the Canadians cut their buys 17.9 percent to 86,791 tonnes—a 16-month low—from 105,695 tonnes.
Shredded remained the favorite ferrous scrap for many offshore mills, although the November total slipped 0.4 percent to 794,971 tonnes from a year-to-date high of 798,143 tonnes the previous month. Exports of No. 1 heavy melt jumped 16.5 percent to 577,687 tonnes from 495,905 tonnes in the same comparison.
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