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Ferrous scrap traders nervous over China health crisis

Market fears Chinese shutdown to tackle virus will hit global supply chains and demand for secondary materials. Below is a teaser of our latest market analysis, which will be published in the upcoming issue of Recycling International.

Such is the speed of developments in the corona virus around the world that reports such as this will almost certainly be overtaken by events. At the time of writing, stock markets were in decline but for the early weeks of the year the impact of the virus was barely felt outside China, especially as it coincided with the national Lunar New Year holiday.

But it soon became clear that the continuing closure of factories, ports and entire regions would affect the wider world. For example, China exported car parts were worth US$ 60 billion last year and any disruption to that major supply chain would be significant. Any slow-down in the domestic Chinese market will also inevitably hit those in the west sending secondary and recovered materials – most notably non-ferrous.

At the time of writing, cases were being reported in significant numbers in South Korea, Iran and Italy and the list of countries was growing daily.

Ferrous markets continued their slow start to the year before collectively weakening throughout January ahead of something of a recovery in February. Prices for HMS I/II 80/20 into Turkey remained relatively flat with little change until the middle of January due to poor finished steel sales in the country.

Only a handful of cargoes were booked at ever-lower prices. A US cargo of a higher grade HMS I/II 95/5 reached US$ 295 per tonne, ahead of a week-long pause in bookings. A UK origin cargo of HMS I/II 80/20 selling at US$ 277 per tonne broke the hiatus, although the previous UK cargo at the start of the year had been booked at US$ 300.

A Baltic cargo of HMS I/II 80/20 at US$ 270 per tonne and a US-origin of HMS I/II 80/20 at US$ 267.50 per tonne brought the month to an end with the market apprehensive about the coronavirus’s impact on global markets.

February kicked off at even lower prices with a Baltic origin cargo of HMS I/II 80/20 booking at US$ 251 per tonne as low finished steel prices could not support higher scrap rates. A hat trick of US origin HMS I/II 80/20 cargoes was reported at US$ 260 per tonne while a UK HMS I/II 80/20 achieved US$ 255 per tonne, down US$ 22 from the previous UK booking.

Further trade saw a European HMS I/II 80/20 achieve US$ 252 per tonne while a US cargo of HMS I/II 80/20 was booked at US$ 264 per tonne.

Prices then moved up on a surge in bookings and restocking activity, with a US HMS I/II 80/20 cargo achieving US$ 268 per tonne, and two Baltic HMS I/II 80/20 cargoes trading at US$ 273 and US$ 274 per tonne.

A further US HMS I/II 80/20 hit US$ 275, while UK and European bookings for the same material achieved US$ 270 and US$ 272 per tonne respectively.

The bookings continued at higher prices on the back of better premiums for finished steel, resulting in a handful of Baltic origin cargoes of HMS I/II 80/20 achieving US$ 275-279 per tonne, while a European HMS I/II 80/20 then reached US$ 276 per tonne. At the time of writing a US HMS I/II 80/20 trade was agreed at US$ 280 per tonne.

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