Containerised Taiwan ferrous scrap diverges from Turkey
The Turkish deep-sea ferrous scrap import price's premium over the Taiwanese containerised import price rose back to the $30/t level in mid-December 2019 for the first time since early February, as the price recovery in the Asia-Pacific containerised market significantly lagged the rebound in the bulk market.
The Argus daily ferrous scrap HMS 1/2 80:20 cfr Turkey assessment yesterday sat at a premium of $37.30/t over the daily containerised HMS 1/2 80:20 cfr Taiwan assessment.
The global seaborne scrap market weakened last year and came under severe pressure in the third quarter in particular. The Turkish import assessment fell on 30 September to last year's low of $221.20/t before it rebounded and rose above $300/t in late December for the first time since the end of May. The price registered a 37pc gain in October-December 2019.
But the Taiwan containerised import price failed to recover at the same rate, rising by only 20pc from $225/t on 30 September to $270/t on 31 December.
The low scrap price increase in the Taiwanese market was driven by the country's mills gaining bargaining power in the seaborne scrap sector and low domestic rebar pricing relative to their Turkish counterparts.
Taiwan influence in Asia-Pacific strengthens
Taiwanese mills were able to limit US exporters' drive to raise prices in the fourth quarter of last year by diversifying their supplier base.
Taiwan in October became less dependent on scrap from its two largest suppliers — the US and Japan. The country reduced the combined share of these two countries in its import market to 62.09pc in October from 68.29pc in July-September and 66.57pc in January-September. The US and Japan's lost share mostly went to Canada, Australia and the Dominican Republic, which saw their Taiwanese market shares rise to 7.75pc, 5.95pc and 3.41pc, respectively.
At the same time, Taiwan's share of US containerised export and Japanese export portfolios increased.
The US exported 358,000t of containerised scrap to Taiwan in October-November, raising Taiwan's share of US container exports to 32.98pc from 29.63pc in the third quarter. Taiwan comfortably sits as the largest buyer of US containerised scrap, while Malaysia, the country's second-largest buyer, accounted for only 21.21pc of US containerised scrap export in October-November.
Taiwanese mills in November booked multiple cargoes from Japan, taking advantage of Japan's weak domestic scrap market and a significant fall in demand from buyers in Korea, which is the largest overseas buyer of Japanese scrap. Taiwanese mills were then able to use these bookings to pressure other suppliers.
Taiwan's influence on Japanese scrap suppliers is likely to remain strong in the near term, as sales to Taiwan accounted for 11pc of Japan's exports in November, compared with just 5.52pc in October. South Korea and Vietnam remain the two largest buyers of Japanese scrap but their share and volume both dropped in November and there are limited signals that demand from South Korea and Vietnam will rise significantly in the near future.
Japan does not offer export data categorised by means of transport. Its scrap exports to Korea are likely made mainly by bulk shipment, while sales to Vietnam are in both bulk and containerised shipment.
Taiwan's influence on the Asian seaborne market during the fourth quarter of 2019 was further boosted by disruption to Indonesian scrap imports. Indonesia placed a temporary moratorium on all scrap imports in late November as it began implementing a new policy aimed to establish provisions on the imports of hazardous and toxic materials as industrial raw materials. The government lifted the moratorium and resumed imports in late December. Further details surrounding the new policy remain under development but the government has yet to release additional guidelines for proposed waste threshold standards or the timing of implementation. Indonesia imported more than 2.5mn t of ferrous scrap in 2018 and the country's absence from the market in the fourth quarter released additional supply into the entire Asian container market.
Sluggish domestic demand curbs Taiwan rebar gains
Taiwanese mills were able to raise domestic rebar offers by about 4pc from the second half of October last year to the beginning of this month.
Offers from Taiwan's domestic benchmark buyer Feng Hsin Steel were 15,300 New Taiwan dollars/t ($511.89/t) on 6 January, up from NT$14,700/t on 21 October 2019.
But mills' counterparts in Turkey achieved a gain of close to 6.5pc in domestic prices during the same period, under Argus' weekly domestic rebar ex-work assessment.
The slower increase in Taiwanese domestic rebar prices reflected sluggish domestic demand. Many construction projects were halted or delayed in the fourth quarter by heavy rainfall. In addition, many investments and projects were slowed down as firms awaited the result of the presidential and parliamentary election that took place on 11 January.
Competitively priced imported billet also limited some Taiwanese mills' ability to raise rebar prices. A number of mills that produce rebar from scrap in the final quarter of 2019 frequently expressed concern about the increased availability of competitive seaborne billet from the Middle East, Russia and Asia Pacific. Taiwan imported more than 300,000t of semi-finished steel products in October, compared with the monthly average of 284,000t in January-September, the country's custom data show.
By Chi Hin Ling
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Q&A: Ramaco adding production, sees market growth
Q&A: Ramaco adding production, sees market growth
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We have not seen any problems, knock on wood, with our rail shipments post the incident. What are your long-term projections for metallurgical coal given expectations that low-volatile coal reserves will shrink in coming decades and the steel industry could be in oversupply? Low vol coal has traditionally been the highest priced coal and the dearest, if you will. High vol A coal has over the last few years grown in importance, and to the extent that there is any new increase in production in the US, it's high vol. What we perceive is that there is going to be a crowding in the high vol space. As a result, our increase in production is primarily in low vol. As far as the demand side is concerned, we do not believe that blast furnace steel demand is going to decline anytime soon. There's a lot of noise from the green community that hydrogen is going to replace coal in blast furnaces. We took some advice on that from the IEA…and when that question was posed (to IEA), the answer that was given was it would take about $1.5 trillion to build a pilot plant using hydrogen by 2035 and probably about another equal or greater sum to build a commercial facility by 2040. So, I don't lose a lot of sleep on the demand for coal for blast furnaces. What I do see shifting, however, is the US has held relatively steady at about 20mn short tons (18.1mn metric tonnes) of met coal demand over the last 10 to 15 years. The growth is clearly overseas, and the growth is clearly at the moment in Asia. When we started back in 2017, and 2018 was really our first year of production, we predominantly sold coal domestically; I think 80pc of our coal went to US steel mills. Now that is almost reversed. We're going to sell probably this year, 70pc overseas, and about a third or less domestically. With Europe moving towards electric arc furnace technology and significant new blast furnace capacity coming online in Asia, what kind of role will the US play as a coal supplier over the coming years? It is cheaper to use a blast furnace than electric arc. And the steel that they (Asian companies) mostly require is the heavier steel for cars and buildings and things of that nature. So, they have a bias towards blast furnace capacity. The US and Europe are very developed economies that are trying to go and wean away from coal, (while) the rest of the world is aggressively moving further into coal. People will shake their heads at the cost that European and American consumers will start to have to pay for that privilege. We see market growth is still there, but it's a different kind of growth. It will be more in the Asian markets, predominantly some in Europe, some in South America and Africa. The low vol coal demand in Asia is extremely strong because while they are able to buy high vol product from Australia very inexpensively, they do not have the low vol production. They need that to blend up to get the proper mix in their blast furnaces. There is a very good future for low vol, and that is the direction we are positioning ourselves. How confident is Ramaco about securing its investments in the longer run given the emphasis on ESG? What I see is sort of a dichotomy. In the thermal coal business, there's not a lot of investment in new mining there for the obvious reason that their customer base is declining. On the met side, it is a bit shortsighted from an investment standpoint because of the composition of the ownership of met coal companies. Virtually every major metallurgical coal producer except for us went through bankruptcy and post-bankruptcy proceedings. Their board composition became essentially distressed debt investors...Their interest was not developing a long-term coal company. Strategically their vision was: "How can we most quickly get money back out of that coal company?" We are certainly the only coal company that is doubling in size. We produced a little under 4mn st last year. We will be at about 4.5mn st this year. We can maybe go higher, depending upon the market. The market is not strong right now. The other issue (for coal producers) even when they weren't doing special dividends, is they've now shifted to doing large-scale share buybacks. You are starting to see the cost curve increase for most domestic coal producers. What you haven't seen, but I think you will probably find over the next probably 18 to 24 months, is you will begin to see depletion kick in. The amount of coal that they are able to produce from their existing operation will begin to decline. 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Liberty Whyalla blast furnace down after maintenance
Liberty Whyalla blast furnace down after maintenance
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Australian new environment agency to speed up approvals
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