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MARKET ANALYSIS

Traders nervous over
China health crisis
Market fears Chinese shutdown to tackle virus

will hit global supply chains and demand for

secondary materials.

60

A U T H O R Robin Latchem

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 out-
side China, especially as it coincided
with the national Lunar New Year holi-
day. 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 sig-
nificant. Any slow-down in the domes-

tic Chinese market will also inevitably
hit those in the west sending second-
ary 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.

WESTERN FOCUS
Fears over coronavirus had not notice-
ably translated into weaker scrap pric-
es at the time of writing although
FastMarkets noted concern from some
market participants that the outbreak
could lead to temporary shutdowns for
businesses and facilities and hit the
supply chain for steel mills. Ferrous
markets continued their slow start to
the year before collectively weakening
throughout January ahead of some-
thing 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 coun-
try. 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 apprehen-
sive about the coronavirus’s impact on
global markets.
February kicked off at even lower pric-
es with a Baltic origin cargo of HMS I/II
80/20 booking at US$ 251 per tonne as
low finished steel prices could not sup-
port 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 pre-
vious 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 respective-
ly.
The bookings continued at higher pric-
es on the back of better premiums for
finished steel, resulting in a handful of

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