/Rusmet.ru, Victor Tarnavskiy/ This winter everybody expected scrap prices boost. However, most experts believed that $500 per ton CFR could be reached not earlier that by the end of the winter – the time of peak shortage of scrap.
This year the US traders started to offer HMS № 1&2 to Turkey and South East Asia countries at $520-525 per ton CFR. Romanian and Russian A3 scrap was bought by Turkish companies at $510-515 per ton CFR. In East Asia HMS № 1&2 price was $490-500 per ton CFR in containers; large-tonnage lots were offered at $500 до $520 per ton CFR, although in this case scrap was purchased by Chinese companies only in small amounts.
The biggest in recent years increase of scrap prices happened due to several factors. First of all it is supply/demand ratio. Scrap prices increase in December was taken as excessive and thus no stockpiles were made. In January the stocks were empty and the consumers had to return to the market. Scrap collecting volumes in the USA, Europe, and Russia remain low due to poor weather conditions. Besides the demand for scrap in these countries’ domestic markets is rather high.
The biggest prices increase due to the competition between domestic buyers and exporters happened in the USA, where main grades of scrap increased in Jan. more than by $70 за т. The US metallurgical plants today have to pay more than $430 per 1 metric ton of HMS № 1. Shredded scrap prices increased in the same period to $450-460 за т. In Japan domestic prices reached $420-445 per ton incl. delivery.
Dramatic flood in Australia affected scrap market as well having caused coking coal supplies problems. Many Asian companies, especially in Japan, Taiwan, and S. Korea, started to use more scrap.
In Chinese scrap market the cancellation of 50% preference on VAT since Jan. 1 caused the prices increase to $510-535 per ton with delivery. This led to long products prices growth in domestic market. Few Chinese companies can import scrap today at about $500-510 per ton CFR. However, in spring, when global scrap prices will fall, scrap purchasing volume in China can increase.
By all appearances, the increase in scrap market will continue at least till the end of January. This will be furthered by advantageous situation in rolled steel markets. In the first half of Jan. flat and long products prices were increasing in all regions, which allows the consumers covering raw materials costs, at least partly. However, in Feb. the market is likely to take a break, since key consumers will have made the stockpiles for several weeks ahead by that time.
The biggest in Europe scrap metals event, the 7th International Annual Forum “Ferrous and Non-Ferrous Scrap Metals – 2011” will be held in Moscow, Russia on February 17-18, 2011.