2 factors raise ferrous export questions in April

While the value of ferrous scrap received another boost this March, maintaining that momentum in April could prove difficult for the commonly exported heavy melting steel (HMS) grades.

Turkey is one of three major Muslim-majority nations among the largest purchasers of United States recycled steel, along with Bangladesh and Pakistan. In all three countries, the end of Ramadan on March 31 is poised to decrease trading activity the week of March 31-April 4, roughly coinciding with negotiations between U.S. sellers and domestic mill buyers.

“Ferrous bookings are expected to be limited in Turkey next week before the Ramazan Bayrami holidays, and mills anticipate lower prices," Davis Index says, with that same report indicating political turmoil that beset Turkey in the third week of March also has influenced the recycled steel trade in that nation.

“Turkish mills have suspended ferrous purchases due to political tensions, currency fluctuations and challenging steel product sales,” the Davis Index report continues, noting electric arc furnace (EAF) mills also seem to have suitable inventory.

In a March 24 LinkedIn post, Atilla Widnell of ferrous scrap shipments tracking service Navigate Commodities says if the Turkish lira experiences a sustained drop in value because of the turmoil, it means U.S. dollar-denominated bulk ferrous scrap imports just became more expensive in Turkey, forcing mills to pause purchases.

When that has happened in the past, according to Widnell, rolling mills in Turkey would buy Chinese and Malaysian steel billet and reheat it rather than purchase U.S. scrap.

“Despite prospective Turkish steel demand destruction, we don't expect ferrous scrap costs to collapse any time soon," Widnell says.

"[Rather,] robust U.S. ferrous scrap prices will keep transmitting to [the] seaborne market. As such, we anticipate this will continue to underpin an incredibly stubborn pricing floor.”

As the recycled steel market heads into the final week of March, Davis Index says the value of HMS and plate and structural (P&S) grades on the East Coast thus far has maintained stable to rising status, crediting better export and domestic market pricing, with the notable exception of Turkish cargo values, where higher bids recently have not been recorded.

Offering an alternative market for U.S. exporters is India and, despite the end-of-Ramadan disruption, ports in Bangladesh and Pakistan.

Davis Index reports buyers on the Indian subcontinent have remained willing to increase their bids by $2-4 per ton for the HMS and P&S cut grades heading into the last week in March.