US steelmaker Nucor sees a relatively balanced ferrous scrap market heading into the August domestic trade, with coastal regions poised to siphon support from a recent rally in US exports.
"It's a fairly well-balanced market from a supply demand standpoint…I certainly wouldn't see any major moves in the near term," said Craig Feldman, Nucor executive vice-president of raw materials said today.
Scrap prices are poised to remain relatively stable over the next 60-days with some regions diverging from this trend, while a rally in export activity through July may help add support to the market.
"Our outlook is relatively stable…there could be some modest moves in short-term…a little bit of dislocation in certain regions, but some of the coastal or export activity could see some prices pushed a little bit, but for the most part we see the outlook stable," Feldman said.
US east coast bulk ferrous scrap exporters have sold at least 12 deep-sea vessels to Turkey so far this month with prices in the most recent US-origin sales reaching $270/t cfr Turkey for premium HMS 1/2 (80:20), the highest levels since the second week of March.
US domestic ferrous scrap prices registered steep cuts in last month's trade, with national average prime grades down $37/gross ton (gt) from June levels and national average shredded scrap prices down $14/gt, as improved scrap flows outpaced a sluggish recovery in demand.
Prices for ferrous scrap #1 busheling for Chicago delivered to consumer fell to $285/gt, the lowest level since April.
Nucor trimmed its scrap inventory by 850,000gt from the end of the first quarter to 2.3mn gt by the end of the second.
Nucor's average scrap and scrap substitute cost used in the second quarter of 2020 was $284/gt, compared with $293/gt in the first quarter and a 14pc decrease compared with $330/gt in the second quarter of 2019.
The results of the company's raw material segment exceeded expectations even as it posted a $1.3mn loss before taxes and other charges, according to Feldman, who said that its David J Joseph (DJJ) scrap processing and trading subsidiary helped offset impacts caused by headwinds from its DRI plants in Louisiana and Trinidad, which provide scrap alternative feedstock to its electric arc furnace (EAF) mills.
The raw material segment earned $21.7mn in the second quarter last year.
Outside sales volumes from the segment were hit by outages at both the Louisiana and Trinidad DRI facilities through the second quarter with volumes down 28pc to 612,000gt compared to 845,000gt in same period last year.
Nucor posted a second quarter profit of $108.9mn, down by 72pc compared to the $386.5mn in profit in the prior year.
Trinidad restarts, DRI faces iron ore pressure
US steelmaker Nucor has resumed operations at its direct reduced iron (DRI) plant in Trinidad and Tobago in early May after being forced to close on 30 March April following government orders to combat the spread of the coronavirus.
Nucor also said that its DRI plant in Louisiana has been setting operational records after it was restarted on 25 April following a three-week outage at the plant because of the market downturn and the spread of coronavirus in the state.
High iron ore prices are expected to be a headwind for the company's DRI facilities in the third quarter.
The Argus ICX 62pc iron ore fines index averaged $92.95/dry metric tonne (dmt) cfr Qingdao in the second quarter. Through July the index has risen as high as $112.14/dmt with prices this week hovering at around $110/dmt cfr Qingdao.
Prices have been driven higher in July by robust demand for Chinese steel on expectations of further economic stimulus, as well as low stocks at China's ports.
The US imported 500,977 metric tonnes (t) of DRI from Trinidad between January through May 2020, down 32pc from 741,986t in the same period last year, according to US Commerce Department data.
