• Ferrous Beat

Ferrous Market Update

The rapidly shifting global trade landscape continues to shape domestic steel and ferrous scrap market conditions as steel imports are down, domestic steel production is up, and steel prices remain elevated.

According to the Commerce Department and American Iron and Steel Institute (AISI), preliminary trade data show U.S. imports of total and finished steel dropped 15.5 percent and 24.6 percent, respectively, month-on-month in June. The sharp decline in finished steel imports included a 28 percent drop in Chinese imports. For the first six months of 2018, total steel imports were down 9.3 percent to less than 17.9 million tons, representing a shortfall of more than 1.8 million tons.

Year-to-Date Total and Finished Steel Imports
Year-to-Date Total and Finished Steel Imports_500

Sources: U.S. Commerce Department, American Iron and Steel Institute

Rising domestic steel production has offset a significant part of the drop-off in imports, but not all of it. According to AISI, year-to-date U.S. crude steel production through July 21 was 51,520,000 net tons, up 3 percent from the corresponding period last year when from the 50,037,000 net tons were produced. Thanks in part to rising domestic output and diminished import demand as a result of the trade measures, American Metal Market reported in mid-July that their U.S. hot-rolled coil index was up to $45.84/cwt (=$916.80/net ton):


Ferrous scrap prices trended have higher this year as well, although scrap tags have not kept pace with the rise in steel prices. Improved overseas demand for scrap has been a supportive feature this year. As ferrous scrap exporters are among the least exposed to Chinese demand, ferrous scrap exports have outperformed as compared to other recycled commodities this year, rising nearly 34 percent for the year-to-date (excluding stainless steel and alloy steel scrap):


The chart below provides a breakdown in U.S. ferrous scrap exports by major destination, including the 48 percent increase in year-to-date shipments to Turkey. Of note, U.S. imports of finished steel from Turkey are down 56 percent so far this year, which raises the question of how long can we ship larger volumes of ferrous scrap to Turkey while at the same time slashing our imports of Turkish steel.


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