Less-than-happy new year

After experiencing ferrous scrap prices with consistently upward momentum in 2021, the first buying period of 2022 proved stressful and not especially profitable for processors and sellers of ferrous scrap.

Surveys that led to Fastmarkets AMM Midwest Index pricing showed prices for all three major ferrous grades fell by around $60 per ton during the January buying period. Export pricing—which had not been as high as Midwest figures—fell by fewer dollars per ton, though less interest from some nations was said to have led to the $15 to $45 declines, depending on the port.

A price drop was not completely unanticipated by processors and traders, but several were dissatisfied with the steepness of the January curve. The market sources also indicate a belief that a February rebound is likely.

“Export markets dropped but have come up since with the rise in Turkey and seem poised to increase further if the [Japanese] Kanto offer has higher values,” a scrap processor based on the West Coast says.

“Demand is there serving the bulk markets in Egypt, Turkey, Greece, Vietnam and Bangladesh. Business is there to be done and cargoes have moved.” – Nathan Fruchter, Idoru Trade & Consult

By mid-January, the Kanto offer was among several export deals being reported by trade publications, including Fastmarkets AMM and Davis Index. Fastmarkets AMM also was reporting buyers from Turkey and Bangladesh booking cargoes in Houston and from the East Coast.

Around that same time, Davis Index reports indicated increased interest in U.S. ferrous scrap supplies by buyers in Bangladesh and Pakistan. That news and pricing service also reported increased import activity in South Korea and Vietnam, though the U.S. was not always the supplier of choice.

Nathan Fruchter of New York-based Idoru Trade & Consult told Recycling Today in mid-January the export demand is substantial and widespread, and scrap prices already were rebounding in active port regions of the U.S.

Fruchter says there is a distinction between the bulk cargo market and the containerized sector. “Demand is there serving the bulk markets in Egypt, Turkey, Greece, Vietnam and Bangladesh,” he says. “Business is there to be done and cargoes have moved.”

Making bookings and following through on container shipping arrangements remain problematic, with Fruchter finding few reasons for optimism.

“On the container shipping side, containers remain in short supply,” he says. While container shippers continue to chase a future where the situation improves, Fruchter notes, “If one or more ports in China close down for another virus-related lockdown, that could screw up container shipping even more.”

The domestic ferrous market in January had problematic aspects of its own, with one source pointing to the behavior of large mill companies and their internal scrap processing networks as a factor.

A processor in the Great Lakes region says one mill-related company came in early in the buying period, making bids around $70 per ton lower than December 2021 prices. Typically, that processor says he sells “a pretty good slug of heavy melting steel (HMS), plate and structural and magnetic steel turnings monthly.”

After receiving what he considered low offers, the processor says he “pulled it all off the table and moved it in other directions,” though still down some $60 per ton from December. The mill-related company later came back seeking HMS and plate and structural scrap, but by then it had been committed to other buyers.

The West Coast and the Great Lakes processors say scrap flows stayed healthy in December of last year and early January of this year, though supply issues could yet rear their heads before February negotiations begin.

In the East Coast export market, a large shredder operated in the Boston area by Schnitzer Steel Industries has been down after a fire in early December. Also in December, operators of other shredding plants voluntarily kept their shredders on low idle, whether to perform maintenance, give personnel holiday time off or to maintain minimal inventory in the 14 states with a year-end inventory tax.

If buyers and sellers can reach an amicable price in February, however, supplies likely can be found. “It was our busiest December in the several years I’ve been here, taking in 30 percent more scrap in December than any of the previous six years,” the Great Lakes processor says.

The West Coast processor characterizes scrap flows in his region by saying flows haven’t changed in the last few months despite some harsh winter weather.

The Great Lakes region recycler adds, “The week between Christmas and New Year’s was very slow; things still are on the quiet side, but the pace is picking up, and we are starting to get busier.”