TAIWAN STEEL SCRAP: Supply tightness driving up prices

The supply tightness for imported containerized ferrous scrap has led prices to continue up in the week to Friday November 27, even though buyers are increasingly balking at the high offers, market sources told Fastmarkets.

Fastmarkets’ daily price assessment for containerized cargoes of steel scrap, HMS 1&2 (80:20), US material import, cfr main port Taiwan was $317-320 per tonne on Friday November 27, up by $2-5 per tonne day on day and by $10-12 per tonne from $305-310 per tonne on November 13.
Buyers were initially seeking containerized cargoes of heavy melting scrap 1&2 (80:20) from the United States' West Coast at last week's level on Monday, before it became apparent that they would be unable to get material at that price.
Negotiation levels increased to $310-315 per tonne cfr Taiwan on Tuesday, with major steel mills confirming transactions at $315 per tonne cfr Taiwan on Tuesday and Wednesday.
Negotiation levels increased to $317-320 per tonne cfr Taiwan by Friday, with strong market expectations that spot prices will continue increasing next week after the Thanksgiving holidays in the United States.
Offers were reported at $315-320 per tonne cfr Taiwan from the start of the week, with sellers not budging on prices before later increasing offers to $325 per tonne cfr Taiwan toward the end of the week.
A shortage of containerized scrap in the spot market contributed to the price increase, with some traders unable to load cargoes at docksides in the US, sources said.
"Some traders won't even dare to purchase cargoes on a fob basis because they’re afraid they won't be able to get freight space on container ships," a Taiwanese trader told Fastmarkets on Thursday November 26.
Shippers are opting to send empty containers over to Asia due to better margins and transport consumer products back to the US, instead of carrying ferrous scrap to Asia.
"This reduces the risk of ferrous scrap damaging containers and allows for quicker turnaround times for container ships departing from Vietnam and China, where consumer products are produced," a second Taiwanese trader said.
Another trader said shippers got better rates if they transported agricultural products instead of ferrous scrap and steel.
High prices in Japan, where Japanese steel mills’ strong demand for ferrous scrap have kept domestic and export offers high, are exacerbating the supply tightness, Fastmarkets heard.
Offers for Japanese H1&H2 (50:50) were reported at $340 per tonne cfr Taiwan, while buyers indicated bids at around $325-330 per tonne cfr Taiwan.
Some sellers abstained from offering material due to better margins in the domestic Japanese market and other import markets, trading sources said.

Paul Lim

paul.lim@fastmarkets.com

Published

Paul Lim

November 27, 2020

11:00 GMT

Singapore