• Ferrous Beat

Ferrous Market Update

Heading into March, surging iron ore prices, improving U.S. steel mill production, advancing domestic sheet tags, heightened Turkish scrap demand and rising Chinese steel industry expectations were all boding well for ferrous scrap.

Scrap Trend Outlook’s trend indicator for March signaled bullish at 66.9 and especially so for foundry grades (80.0), cut grades (76.1) and prime grades (75.4). On the domestic front, AISI reported that year-to-date (through Feb 18) U.S. steel production increased 4.8% to 12.07 million net tons while the capacity utilization rateimproved to 72.7% (from 70.8% previously). Meanwhile, American Metal Market reports U.S. steel producers including ArcelorMittal are now seeking $640 per ton for new hot-rolled coil orders, although questions remain as to whether the announced sheet price hikes will stick. In her presentation at our ISRI Ferrous Webinar, Steel-Insights president Becky Hites gave the following odds on the future direction of hot-rolled band prices:

In overseas markets Turkey remains squarely in focus given the current trends in Turkish steel production, scrap buys and exchange rates, not to mention recent trade case developments. According to the World Steel Association, Turkish steel production increased 12.8% year-on-year in January 2017 to 2.93 million metric tons. As Turkish steel production ramps up and the Turkish lira has stabilized, our friends at The Steel Index report that the Turkish scrap market saw a two week period of dramatic rises in prices. 


Meanwhile, Reuters reported in late February that “Turkey's lira hit the strongest level in more than six weeks against the dollar” as Turkey’s central bank recently adjusted their inflation and interest rate expectations and as emerging market currencies have retraced some of their losses since the U.S. election. With respect to trade, on March 1 the U.S. Commerce Department’s announced preliminary anti-dumping duty margins on imports of Turkish rebar at 5.29% for Turkish producer Habas Sinai, 7.07% for Icdas Celik Enerji Tersane, and 6.20% for all other Turkish companies. Preliminary AD margins were set at 3.48% to 29.47% for rebar imports from Taiwan and 209.46% for all Japanese producers.

Sticking with trade, recently published export figures from the Census Bureau show that China increased their ferrous scrap buys considerably in December 2016 and increased their ferrous scrap imports (ex-stainless and alloy scrap) from the U.S. by 14% to more than 430,000 mt in 2016. Along with improved demand from Mexico, 


Thailand, Peru, Pakistan, Vietnam, Kuwait and Bangladesh, there continue to be glimmers of hope on the export front even with the uncertain market conditions in Turkey and on-going concerns about the strong dollar. Here’s the recent annual trend in U.S. ferrous scrap exports by major destination going back to 2013:

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