Ferrous – As hot-rolled coil and rebar prices remain under pressure, Fastmarkets AMM has been reporting that ferrous scrap tags in the northern U.S. quickly settled down around $30 per ton this month. According to AMM, this continues a rough three month period.
Scrap dealers in Pittsburgh, for example, have reportedly seen $85-90 per ton declines during the last 3 months. Rebar pricing hit a 14-month low amid continuing uncertainty about whether a viable infrastructure bill will be passed anytime soon.
Meanwhile, carbon steel scrap imports into the United States continue to increase, putting further pressure on domestic processors. According to the most recent trade data from the Census Bureau, year-to-date (Jan-Apr) U.S. ferrous scrap imports (excluding stainless steel and alloy steel scrap) are up 12 percent by volume this year, which comes on top of an 8 percent increase in 2018:
The largest sources of ferrous scrap imports so far this year are Canada (-1.7%), Sweden (+106.8%), Mexico (+76.6%), the Netherlands (+45.4%), and the UK (+25.5%). European steelmakers are calling for a review to increase tariff-free import quota volumes at a 5% per year basis, according to AMM. Even if a major steel exporting economy such as Turkey were to fill the quota volumes, demand for scrap would likely were such a measure put into place.
Ahead of the looming July 1 deadline, U.S. nonferrous scrap exports to mainland China have reportedly been creeping back up in recent months:
But for copper and copper alloy scrap exporters, Malaysia is the largest export market right now. According to the Census Bureau figures, the U.S. has shipped more than 79,000 tons of copper scrap to Malaysia through April, and increase of 385% as compared to Jan-Apr 2018. Recall that Reuters and other news outlets reported last month that “Jiangxi Copper Co., one of China's biggest copper producers, plans to build a plant to produce refined copper in Malaysia's eastern state of Sabah as the country emerges as a dismantling center for non-ferrous scrap, its chairman said. The company plans to use copper scrap and not copper concentrates as raw material for the plant, according to Long Ziping.”
So what grades of copper and copper alloy scrap are we now sending to Malaysia? Here’s the YTD breakdown and comparison, which bears some similarity to what used to be sent to China:
Recovered Paper –
According to the latest prices in the Paper Stock Report, OCC-11 prices have little to no margin over SRPN-56 pricing. With west coast pricing holding to stronger margins, it appears that export market demand is keeping the preferential pricing up. However, RISI pricing reports show a healthier margin but an overall slump in the market that’s been steepening since the beginning of 2019.
Here’s the trend in U.S. recovered paper exports by major grade so far this year: