Ferrous – Fastmarkets AMM reports this week that most of the major U.S. ferrous scrap grades are down $35-$40 per ton this month as prime scrap tags fared worse than obsolete grades. The latest price drop comes amid reports of declining steel mill capacity utilization rates, rising inventories, softer sheet prices, and uncertain overseas demand for ferrous scrap.
The American Iron and Steel Institute reports that for the week ending October 5th, “…domestic raw steel production was 1,804,000 net tons while the capability utilization rate was 78.0 percent. Production was 1,877,000 net tons in the week ending October 5, 2018 while the capability utilization then was 80.1 percent. The current week production represents a 3.9 percent decrease from the same period in the previous year. Production for the week ending October 5, 2019 is down 1.2 percent from the previous week ending September 28, 2019 when production was 1,825,000 net tons and the rate of capability utilization was 78.4 percent.”
U.S. ferrous scrap exports (excluding stainless steel and alloy steel scrap) reportedly improved in August on heavier loadings for Vietnam, Saudi Arabia, South Korea, Taiwan, Turkey, Malaysia, Mexico, and other destinations. The Census Bureau trade data show August ferrous scrap exports were up 9% from July to 1.52 million metric tons in August.
But after getting off to a slower start in 2019, year-to-date U.S. ferrous scrap exports are still down just over 1% as compared to the first 8 months of 2018 as YTD demand has contracted in Mexico, China, India, Egypt, Thailand, Indonesia, and other markets.
Nonferrous – U.S. nonferrous scrap metal exports reportedly improved in August as well, with aluminum and copper scrap exports up 9% and 8%, respectively, as compared to the July volumes. For U.S. copper scrap exporters, Malaysia continues to be the major export destination this year, with Jan-Aug 2019 shipments up nearly 165 percent year-on-year to more than 148,000 metric tons, eclipsing the 71,000 tons of copper scrap shipped directly to mainland China.
In contrast, mainland China remains the largest reported destination for U.S. aluminum scrap exports this year, with more than 280,000 tons of aluminum scrap shipped to China through August. Other major markets for U.S. aluminum scrap this year include South Korea (180,000 mt), India (175,000 mt), Malaysia (145,000 mt), Mexico (124,000 mt) and Hong Kong (75,000 mt). For the year-to-date, U.S. aluminum scrap exports of just over 1.26 million mt through August were up 13% as compared to the corresponding period last year, according to Census Bureau trade data.
Recovered Paper – PPI Asia reported last week that “Indonesian mills are stepping up purchases of recovered paper (RCP) imports as the implementation of a new import regime gets underway there. Buyers in the country are restocking especially on brown grades after holding back purchases for the past several months as the Indonesian government put the new rules in place. Under the regime, inbound RCP cargoes are required to have pre-shipment inspections in their countries of origin, carried out by surveyors assigned by the Indonesian authorities. Meanwhile, the contamination level in RCP imports needs to be below 0.5%.”
According to Census Bureau trade data, U.S. exports of recovered paper and fiber to Indonesia were already down 2% year-to-date through August to around 677,000 metric tons. Diminished trade flows this year to China (-18%), India (-9%) and Mexico (-12%) have been partially offset by improved demand from Vietnam (+22%), Canada (+18%), Taiwan (+34%), Thailand (+47%), and Malaysia (+112%). Of note, a growing volume of business is taking place with Latin American countries this year including Colombia, Ecuador, Argentina, Guatemala, Chile, and others.