Posted on 31 Mar 2020
US domestic scrap merchants have expressed concern over the effect on demand of continued uncertainty surrounding the Covid-19 pandemic and increasing mill outages, Kallanish reports.
At the beginning of March, before the virus outbreak accelerated, the scrap market outlook was bullish, with many market players predicting sustained demand and steady prices going into April. In the past two weeks this sentiment has vanished as global measures to counter the pandemic have slowed trade in all markets.
A north-eastern merchant notes that "...with the current instability surrounding the markets, it is difficult to predict the effect […the pandemic] will have on future demand, but we will for sure see a drop in prices."
A Midwest merchant, who was expecting a decrease of $40/gross ton a week ago, has revised his expectation to a $60/gt drop.
He tells Kallanish: “The situation is worsening very quickly. I am hearing that mills are targeting steeper price decreases. But they should not forget that it is not only demand decreasing, but also supply.”
More mill outages are expected in the US market in the near term as a result of measures against the virus and stagnant market conditions. Mills’ demand for scrap is therefore also expected to fall compared to March. The April buy cycle is expected to start by the end of current week and fully settle next week, though with much-reduced volumes.
On the West Coast, US-origin containerised HMS 1&2 80:20 prices dropped for the fourth consecutive week in Taiwan. This was amid low scrap demand, uncertainty about the finished steel markets and decreasing scrap prices in Turkey. Scrap offers, which stood at $220/tonne cfr Taiwan a week ago, have fallen to below $215/t cfr, with very low interest from buyers.
On the East Coast, Turkey’s demand for US scrap remains low. Rumours of US-origin deals at $201/t and $210/t cfr Turkey were denied by sellers. However, the recent Baltic-origin HMS 80:20 scrap deals at $206-207/t cfr Turkey show US suppliers are not able to sell into Turkey at desired prices.
US export prices are expected to remain under pressure for some time.
Source:Kallanish
