Taiwanese ferrous scrap price hits five-year high

Taiwanese containerised ferrous scrap import prices rose to a five-year high this week on tight supply, with some buyers eager to secure tonnages anticipating a further price increase.

The Argus daily containerised HMS 1/2 80:20 cfr Taiwan price stood at $482/t on 20 October, up $5/t on the day and $17/t higher on week. The assessment was up by 78.5pc on year and stood at its highest level based on Argus records dating back to 2016.

Month to date, the price is up by 4.78pc. A seasonal tightness in supply from the US was the main reason behind the surge, traders said.

"Scrap collection efforts are usually more tedious towards the end of the year amid the approaching Christmas and New Year festivities. [Covd-19] infections are still a problem in the west coast, and you have to deal with the higher freight rates due to the lack of shipping availability," a seller said. Other trade sources said that that sellers were withholding offers, awaiting higher prices.

Trades were concluded at $480-$483/t cfr this week, with offers north of $490/t. It would be nearly impossible to secure cargoes below $480/t this week, a seller source said.

Buyers remained divided on the outlook. Some buyers were actively sourcing seaborne cargoes, anticipating a further surge in imported scrap prices. Mills are relying more on domestic scrap collection but imported scrap remains vital for our steelmaking needs, a buyer said. Another buyer said that they had over a month's inventory and would wait for the market to cool before making any purchases.

Japanese offers firm

Firm domestic demand lifted ferrous scrap collection prices in Japan this week.

Tokyo Steel raised scrap collection prices by ¥1,000/t ($8.80/t) at its Tahara plant and by ¥500/t at its Utsunomiya plant, effective from 21 October. This was the fifth adjustment in October, with the plants' collection prices up by ¥7,000-7,500/t ($62-66/t) this month. Dockside collection prices at Tokyo Bay rose slightly from last week, with H2 at ¥53,500-54,500/t, HS at ¥63,000-63,500/t and Shindachi at around ¥66,000/t.

Japanese H1/H2 50:50 offers to Taiwan were above $540/t cfr on firm domestic Japan prices. The premium over US containerised HMS1/2 80:20 stood at around $55/t, higher than the typical spread of $15/t, which made Japanese scrap unattractive for Taiwanese mills.

"Domestic demand in Japan is bullish, so exports are the least of their concerns. Overseas buyers in Vietnam and South Korea will have to pay a premium if they want to purchase prompt cargoes from Japan. Else, they can opt for US scrap, which is cheaper but has a longer delivery time," a trader said. Some market participants were skeptical about the bull run, as the Chinese billet market has tapered off.

"There is a lot of uncertainty in the market now. Unless we get a clear indication of firm billet demand from China, we will not consider buying scrap at such a high price," a Vietnamese buyer said. Vietnamese mills' profits have plunged on the back of surging scrap prices and stagnant finished products prices. "We may have to cut production if we don't see better sales prices in the near future", the buyer added.

By Ng Jing Zhi, Xia Ji