The new tax policy of the Trump administration in the US has disrupted international scrap trade flows and has added cost pressures, though demand still determines the price movements, according to a report published by the Bureau of International Recycling (BIR).
According to BIR, scrap demand has remained strong in certain countries with higher domestic consumption. However, other countries have witnessed a significant slowdown in demand due to a decrease in manufacturing output and the adjustments to steelmaking activities in response to political uncertainty and shifting market fundamentals.
In the US, scrap flows were substantially higher at the beginning of the second quarter of this year as a result of improved weather conditions and higher prices. However, in late April, the pressure of tariffs became more evident, resulting in Mexico’s scrap purchases from the southern US virtually coming to a halt, and in the supply of scrap grades such as P&S growing, which pushed prices lower. As a result, most US scrap dealers have dropped their prices in May.
Meanwhile, in the UK, flows into scrap yards remain unstable, with particularly shredders operating well below capacity. Also, many dealers have chosen to stockpile in the hope that uncertainty will ease and prices will increase.
In Turkey, import scrap prices dropped significantly in April, leading to an increase in containerized scrap shipments from Europe to India and Pakistan, supported by falling freights costs.
Looking at Asia, the scrap market in the region remains under pressure as China’s steel exports skyrocketed in the January-March period of this year to 27.43 million mt, the highest quarterly level since 2016. In the meantime, Taiwanese steelmakers have continued to choose billet, pig iron and domestic scrap, leading to a substantial year-on-year decline in scrap imports during the first quarter of the current year. Also, the Japanese scrap market has been weak since mid-April this year due to growing concerns about a global economic slowdown as well as the appreciation of Japanese yen against the US dollar, which has made exports difficult and has softened domestic prices.