Logistics difficulties surrounding containerized ferrous scrap exports may continue to stifle shipments into early 2021 as demand and supply-side factors push seaborne scrap prices in Taiwan and other southeast Asian countries toward record highs to close 2020.
In recent weeks, scrap exporters reported difficulty in acquiring bookings for ferrous shipments into southeast Asia as shipping lines lowered the priority of scrap metal cargoes. Taiwanese buyers told Argus the number of container scrap offers from US suppliers has fallen by 50-60pc from normal levels as a result, while others suggested the decrease has been even more dramatic.
US west coast exporters suggested shipping lines are reacting to extensive turnaround times at unloading ports and seasonal demand for containers in Asia to export holiday goods, with some shipping lines choosing to send empty containers back to Asia to expedite the process.
"There are so many goods trying to find their way into the US right now from Asia that shipping companies would rather send empties back to Asia than wait for scrap to be processed at ports," said one US west coast trader.
The delays echo some of the disruption the container trade saw between March and June during the early days of the coronavirus pandemic.
"The problem isn't on the loading side, but on the delivery side," a California-based scrap supplier said. "It could take up to seven days for the container to clear customs, get loaded onto a truck, and return to the shipper."
In another move aimed at accelerating the movement of containers back into Asia, ocean carriers were heard to reduce the number of "free days" issued to those with a container booking. "Free days" are an allotment of time given to process and unload containers and return them to the carrier before the shipping line begins charging demurrage fees.
Some shipping companies instituted a lottery system to select bids which would receive a confirmed shipping slot. Shipping lines also increased charges for "rolling over" a container booking onto a different vessel, in some cases charging $30/container.
The inability to easily ship containerized freight has played out alongside a surge in global ferrous scrap prices. In the key import hub of Taiwan, prices for HMS 1/2 80:20 have climbed by $110/t since October to $375/t cfr, the highest levels record since Argus began assessing the market in September 2016. US offers for HMS 1/2 80:20 climbed as high as $350/t fas Los Angeles as of 11 December, the highest price levels seen since March 2018.
Other scrap markets have also climbed to multi-year highs amid the logistics difficulties. Containerized shredded scrap prices for cfr Bangladesh has reached $420-425/t while fas New York moved above $360/t, both the highest since March 2018.
Exporters anticipate difficulties to extend at least through the Chinese lunar new year, which poses logistical complications annually, but the added wrinkle of the coronavirus pandemic has obfuscated when shipping issues could clear.
"It's very unusual," said a US west coast trader. "I can't get a container booking until January. I've tried several different lines, this is not a seasonal event."
US-based exporters are contending with rising freight costs on bookings into Asia, with some exporters saying freight costs doubled in December. Argus assessed freight rates from Los Angeles to Taiwan at $7-10/t in October after historically low rates of $6-8/t in September. By December, rates have risen to as high as $9-15/t.
European exporters also noted difficulty in booking vessel space throughout December up to mid-January. Although booking spaces are available, one exporter said the freight rate being charged on a spot rate basis is double the normal price levels and difficult to make viable.
UK ports are heard to be congested with large numbers of export containers laying in ports for an average of three to four weeks. Some exporters anticipate the import volume into UK ports, as well as other global ports, will start to reduce as holiday shipping starts to cool which should allow export containers to leave ports.
