DUBAI (Commodity Online): Steel scrap prices are heading south across the globe now. Even though global scrap market resisted the decline for long but in mid-October the prices started falling.
In Far East the price for the US scrap decreased to $285 per tonne from $300 per tonne. Japanese H2 scrap is purchased by Taiwanese and Korean companies at $290 per tonne CFR and less.
In Japan domestic quotations for scrap fell by 30% in recent two months due to the drop of Chinese import almost to zero level.
Tokyo Steel Manufacturing Company again decreased purchasing prices for scrap since October 16 to JPY 21500 to JPY 23500 with delivery.
In the US the prices for main kinds of scrap decreased by $10 per tonne to $20 per tonne as compared with early October.
The main cause of the prices drop is the absence of serious purchases in Turkey and China, the countries which were the biggest scrap importers in the first three quarters of 2009. By now China almost stopped scrap importing due to domestic steel products prices decrease. Turkish companies which had to reduce steel melting volumes, buy small amounts of scrap. American and European companies have stopped making scrap stockpiles. They are to return to the market in January.
The fall in scrap market happened by the same reasons as steel products prices decrees. The main reason is steel overproduction caused by too optimistic expectations of the crisis finish by the end of current year and according steel prices increase. Metallurgical companies started buying raw materials in July to August, preparing for market recovery. This caused scrap shortage and scrap prices increase to about USD 320 per tonne CFR in Turkey and to mere than USD 350 per ton CFR Eastern Asia. Now steel makers use these excessive scrap stockpiles and they have all opportunities for operating for a fall.
Scrap prices decrease in Eastern Asia countries can return China into the market. Domestic prices for scrap similar to HMS No 1 reach USD 350 per tonne and more with delivery in Eastern provinces. At the decrease of import prices to USD 290 per tonne CFR and less such transactions become profitable for Chinese traders despite of the crisis.
Thus, there is big possibility that scrap prices decrease in Mediterranean will stop at the point of $230 per tonne to $250 per tonne CFR Turkey; in Far East region at $280 per tonne to $290 per tonne CFR China.
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