US containerized scrap prices leaped on the West Coast after buyers increased their activity fearing further prices hikes, slightly better container availability and stronger demand from domestic mills.
West Coast buyers increased the usual spread of $20-25/m between HMS 1&2 (80:20) and P&S 5ft and shredded to $30-40/mt because of their trades. Buyer resistance began creeping in at the end of Thursday, but this trend is being viewed as a temporary correction of around $5-7/mt since importers are expected to need more scrap to meet or increase the mills’ capacity utilization in their countries.
Japanese scrap offers declined by about $5/mt a few days ago which queued US-based sellers of potential lower bids by buyers.
China’s warnings on steel price manipulation and enforcement of environmental rules with spot checks dampened prices in China and sellers relying on Chinese imports began to step back. Still, the overall market remained buoyant on strong Turkish export rebar prices and expectations of improved global economic activity through the summer. Sellers expect continued buying activity at strong prices.
Buyers note concerns over the uncertainty related to the COVID-19 pandemic as well as sustainable pricing to end consumers. One market participant noted that mills can adjust pricing to fit higher raw materials prices but end consumers also have margin concerns and bid pricing must match steel buying prices or projects could be delayed or renegotiated, which would extend timelines.
Importers are also facing limited inventories and strong domestic scrap buying prices. Some note that domestic scrap prices may dampen over the next two weeks and become more attractive than the high imported levels.
In New York, some buyers reported high buying prices compared to last week’s index, especially in buys made from Monday to Wednesday while others began negotiating at lower prices.
The weekly Davis Indexes in New York fell by $2-15/mt on most grades, except busheling, after having risen by $25-44/mt last week. #1 busheling rose by $3/mt to $494/mt fas while HMS 1&2 (80:20) dropped by $15/mt losing about one third of the climb last week and is now at $443/mt fas. The index lags the latest transactions, but some are reporting negotiating HMS 1&2 (80:20) as low as $425-430/mt fas. P&S 5ft dropped by $3/mt to $471/mt fas while shredded fell by $2/mt fas to $463/mt. If the trend continues beyond a momentary correction, the indexes next week may display further declines.
The weekly Los Angeles containerized scrap indexes rose by $14-19/mt this week after gaining $21-28/mt the prior week with #1 busheling and P&S 5ft climbing by $17/mt to $458/mt fas and $448/mt fas, respectively. HMS 1&2 (80:20) rose by $14/mt to $417/mt fas while shredded grew by $19/mt to $450/mt fas.
In San Francisco, the weekly indexes rose by $16-24/mt after increasing by $21-31/mt in the prior week. The index for #1 busheling climbed by $21/mt to $451/mt fas while HMS 1&2 (80:20) increased by $16/mt to $410/mt fas. P&S 5ft climbed by $21/mt to $440/mt fas as shredded gained slightly more by $24/mt to $443/mt.
Seattle’s weekly Davis Indexes grew by $17-25/mt after a more accelerated increase of $21-29/mt last week. The index for #1 busheling rose by $23/mt to $446/mt fas while HMS 1&2 (80:20) increased by $17/mt to $405/mt fas. P&S 5ft climbed by $22/mt to $435/mt fas as shredded also rose by $25/mt to $438/mt fas.
Turkey’s US-origin HMS 1&2 (80:20) increased by $7.45/mt to $510.38/mt cfr on Thursday compared to May 13.