Page 140 from: May 2008

140 May 2008

m a r k e t a n a l y s i s By Alfred Nijkerk

Price hike for scrap, steel and freight

Steel prices keep rising, with billets exceeding US$ 950 per tonne ex
works and rebar prices in the south of Asia climbing to an incredible
US$ 1200 per tonne. Pig iron prices are above US$ 700 per tonne
cfr New Orleans; HBI prices are lagging behind somewhat although
this scrap substitute is barely available at present. Since the start
of the year, domestic scrap prices in the USA have risen some US$
260 per tonne to well over US$ 550 delivered while fob Rotterdam
prices have jumped Euro 185 (US$ 300). Meanwhile, steel mills
in the Brescia region of Italy are reporting shortages of scrap.
Shipping freight rates remain at high levels and have again
shown an upward tendency. In late April, fob Rotterdam pric-
es were at US$ 630 per tonne for standard quality 80/20
HMS I and II scrap, US$ 640 for shredded, and US$ 610 for
the 70/30 HMS I/II mix.

Ferrous
Closed: May 8 2008

Despite expectations of a fall in scrap prices early in the second
quarter of 2008, continuing short-
ages of scrap have been reported
from around the world. This lack of
material is attributed to lower stocks
and disappointing scrap arisings
since the winter collection lull came
to an end. In addition, mills are
reporting heavy demand for scrap
given that the prices of competing
commodities remain high; pig iron

and DRI/HBI remain short for differ-
ent reasons (see below).
Rates applying to large cape-size dry
bulk tankers increased more than
20% in April.
Shipping freight rates remain at high
levels, and the shortage of ships and
containers looks set to continue in
the second quarter and to produce
even higher rates. Freight rates from
Rotterdam to Turkey rose to US$
65-70 per tonne, and to US$ 80-85

from the US East Coast to the same
destination. The exchange rate of
the U.S. dollar versus the euro rose to
e 1 : US$ 1.54.
In the USA, shredded scrap prices
jumped more than 35% during April
to exceed US$ 555 per long ton deliv-
ered, or broadly the same as the fob
price for overseas exports. Having
stood for a number of weeks at US$
351.17 per gross ton, the US Compos-
ite price for HMS I heavy scrap leapt to
US$ 499.13 on April 7 and by a fur-
ther US$ 3.37 to a record-high
US$ 502.50 on April 14. This repre-
sents an increase of more than US$
150 per ton compared to a month ago
and of US$ 235 in the last year.
For 80/20 HMS I/II, the US East Coast
export price has jumped to US$ 610
per tonne fob, while a West Coast
price of US$ 630 cfr South East Asia
has been recorded. In Europe, prices
have also witnessed a spectacular
increase of around Euro 170 per tonne
since January 1. In the UK, scrap prices
have climbed £65 per tonne (US$

130) after a January increase of £45.
In early April, South Korean mills
bought two 35 000-tonne cargoes
from US West Coast traders – one from
Pacific Coast Recycling at US$ 618 per
tonne cfr for HMS I and the other from
Sims USA at US$ 628 per tonne. But
two weeks later, new sales were
booked at US$ 650 per tonne cfr
South Korea. By mid-May, major vol-
umes of the 80/20 HMS I/II scrap mix
had been sold to Turkey at US$ 650-700
per tonne and later at US$ 710 per
tonne cfr.

Scarcity of containers
There has been a continuation of the
trend towards containerisation of
scrap for export mainly to the Far East.
Ferrous and non-ferrous scrap, recov-
ered paper and even plastics scrap
now represent the largest form of
cargo to be carried in containers,
especially from the US West Coast.
The leading container export harbour
in the USA is Los Angeles, followed
by: Long Beach, California; New York/

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