Page 36 from: December 2014

36 December 2014

M A R K E T A N A L Y S I S

Ferrous

A year of unfulfilled promise
After a couple of months of steady price erosion,
the ferrous scrap market has been showing signs
of greater stability in early December – to the
extent that, depending on the market and the
customer, sellers have been winning an extra
dollar or two for their tonnage of late. Latest
cfr price indications for shipments from
Europe to Turkey are: US$ 295-300 per
tonne for standard quality HMS I/II 80/20
scrap; US$ 300-305 per tonne for
shredded; and US$ 270-275 per tonne
for the HMS I/II 70/30 mix.

Closed: December 3 2014

Ferrous scrap prices appear likely to end 2014 some US$ 100 per tonne
below the level at which they began a
year that delivered significantly less
than it had promised. But the final
quarter has taken a slightly more posi-
tive turn of late, with some easing in

the downward pressure on prices.
At the time of our previous report in
early November, prices paid by Turkish
mills for European supplies of HMS I/II
80/20 scrap were heading inexorably
towards the US$ 300 per tonne barrier.
Shortly after going to press, a Baltic

cargo was booked at US$ 305 per
tonne, thus confirming that the price
trend was still downwards. And less
than a week later, a deal was clinched
at just below US$ 300 per tonne. As is
customary, US sales of the same scrap
mix were fetching around US$ 10 per
tonne more.
For European scrap, prices as low as
US$ 290 per tonne were subsequently
heard. But in a month of scant booking
activity by Turkish producers, there is a
widespread belief at the time of writing
that the sortie into sub-US$ 300 terri-
tory could prove to be reasonably
short-lived. Towards the end of Novem-
ber and in early December, some sup-
pliers of HMS I/II 80/20 from the Baltic
were able to command US$ 300-305
per tonne on a cfr basis whereas Euro-
pean shippers in general were still hav-
ing to be content with a few bucks
below the US$ 300 threshold.

Flows cut by 50%-plus
In the domestic US market, ferrous
scrap prices in many key areas dropped
in November by typically US$ 25-30
per ton. But with low prices said to
have cut scrap flows by more than 50%

in some US regions during the penulti-
mate month and with weather condi-
tions beginning to hamper movements
of material, the early indications are
that December will be a more stable
month for domestic scrap prices.
On the export front, meanwhile, latest
Census Bureau figures further under-
line this year’s sharp decline in US
overseas shipments of ferrous scrap. To
all destinations, 20% was sliced from
outgoing volumes to give a total of just
under 10.8 million tonnes – a drop of
around 2.7 million tonnes when com-
pared to January-September 2013.
Leading buyer Turkey slashed its pur-
chases by 33% year on year to 2.774
million tonnes while deliveries to Tai-
wan and South Korea were trimmed by,
respectively, 14% and 20% to 1.884
million tonnes and 1.276 million
tonnes. However, the most dramatic
change was reserved for US shipments
to China which tumbled 68% from last
year’s January-September levels to
390 211 tonnes. As a result, US exports
to India were not far behind on
355 798 tonnes for the opening nine
months of this year – still a drop of
10% from the same period in 2013.

US demand keeps ArcelorMittal
projections on track
Leading steelmaker ArcelorMittal is
still anticipating global apparent
steel consumption growth of approx-
imately 2.25-2.75% for this year.
And this performance will be bol-
stered by an upturn in US demand
greater than previously anticipated
at 8.25-8.75%. ‘Demand conditions
in Europe have also remained robust
during the seasonally weak summer
period, and we maintain apparent
steel consumption growth expecta-
tions in 2014 of 3-3.5%,’ it adds.
For China, ‘signs of stabilisation’
owing to the government’s targeted
stimulus initiatives will lead to
domestic steel demand growth 1.5-
2% for this year, according to the
steelmaker. ‘While risks remain to

steel demand in the CIS and other
emerging markets including Brazil,
the stronger fundamentals in our
key developed world markets con-
tinue to support our expectation
that steel shipments should increase
by approximately 3% in 2014 as
compared to 2013,’ it ventures.
According to ArcelorMittal’s chair-
man and ceo Lakshmi N. Mittal, the
company’s latest quarterly results
‘show the considerable improve-
ment in our steel business which has
more than offset the fall in the iron
ore price’. Europe delivered another
‘strong’ quarter to reflect its
‘improved market conditions’ while
NAFTA business recovered ‘after a
disappointing first half’ to the year.

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