Strong Start to 2019 for Steel Scrap Prices

Out with the old and in with the new! 2018 was a great year that unfortunately ended on a sour note. Section 232 definitely had a major role in the ending of 2018. We saw pricing to Turkey for HMS hit US$ 280 per tonne and in Asia it was around US$ 305 basis HMS. We now welcome 2019, the Year of the Pig - known for good fortune, satisfaction and wealth. We have seen a US$ 50 per tonne improvement in pricing already.

Chinese steel demand hit a lull towards the end of 2018, but we are seeing pricing and demand pick up. Supply problems from Vale have had a severe impact on iron ore pricing, going from US$ 67 per tonne to as high as almost US$ 92 in less than a month. High costs and increased demand have led to higher scrap prices and support at today’s levels. With increased domestic demand and more investment in infrastructure, all this is giving China a more positive outlook for 2019.

Section 232 is still a concern, though all suppliers have adapted to new regulations in remarkable time. Adjusting to this market change has forced everyone to seek new buyers. Many turned to India where record volumes are now going, but this in itself has created new issues. India has been shocked by this massive inflow and now customs is reviewing new policies and regulations for the importation of both ferrous and non-ferrous materials.

Turkey has led the surge from the start in 2019. With low inventories and a rising billet market, Turkey started to buy with a fury, driving HMS prices from US$ 280 per tonne to roughly US$ 330 at the time of writing and signifying the country’s renewed hunger for scrap.

US markets remain strong, supported by the lack of foreign imports. With the cooling of interest rates hikes, the USA continues to look healthy and focused on a continued rise in steel production.