A global shortage of shipping containers that massively disrupted the trading of containerised ferrous scrap during the spring is over, leading recyclers at an industry webinar said yesterday.
Containers are readily available for scrap shipments, three global exporters of ferrous and non-ferrous scrap said on a Bureau of International Recycling (BIR) online panel yesterday, echoing sentiments stated by multiple Argus sources over the past week.
Containerised shipments of scrap from the US and Europe were almost paralysed from mid-February to the end of April because of a build-up of containers at Chinese ports during China's lockdown to restrict the spread of the Covid-19 outbreak.
This limited the number of containers leaving the country and consequently the availability of all containers for export purposes worldwide. Exporters of scrap metal via container had insufficient containers to deliver on previously agreed contracts, necessitating delays or cancellation, while container freight rates spiked to levels that made new trades economically unviable.
But China's steady progress out of lockdown in March-May, even as similar measures were implemented in western economies, mean that containers began to move on the water again.
"The container shortage coming into the west coast was early [in the Covid-19 pandemic]. Now there is no shortage of containers at all — China is shipping a lot of material this way," the chief executive of US metals recycler SA Recycling, George Adams, said.
The president of Hong Kong-headquartered trading firm Global Metals Network, Mark Sellier, agreed that container availability has returned, but noted that container freight costs remain higher than in the pre-pandemic period, particularly from Europe. The cost for ferrous scrap in 24ft containers from the the UK to Pakistan stood at $1,380/container at the end of last week, Argus heard.
Market participants expect increased availability to continue to drive freight costs down in the coming weeks. But one note of caution was struck on the BIR panel by David Chiao, president of US recycler Uni-All Group. Chiao pointed out that the slowdown in US economic activity as a result of its coronavirus restrictions means that exporters from Asia are finding limited orders for goods from the US.
Lower overall US demand across all markets could limit the movement of container ships to the country and again restrict availability for scrap exporters. Chiao said it will be clear whether this imbalance occurs in around a month's time.
The current return of container availability is being accompanied by a revival in demand in the key ferrous scrap import markets of India, Pakistan and Bangladesh.
All exporters that spoke on the BIR webinar identified India as the one scrap market that truly shut down to imports as a result of its Covid-19 lockdown. India last week announced plans for a phased easing of restrictions in "non-containment" zones starting from 8 June, while strict restrictions will remain in place for high-infection containment zones until 30 June.
Many large urban and industrial centres are still registered as containment zones, but even the first indications of lockdown restrictions began to galvanise Indian scrap demand. A 30,000t bulk scrap cargo from the US west coast to the Indian northwest port of Kandla was heard transacted for June shipment at the end of last week. The cargo comprised 10,000t of HMS 1/2 80:20 and 20,000t shred priced at an average of $280/t. It was heard to have originally been agreed in April and pushed back owing to the Indian lockdown, causing the price to be higher relative to other new bulk sales to Asia.
Another US west coast cargo comprising 32,000t of shred was heard sold to Pakistan this week at $282.50/t.
