Steel scrap may be supported by potential container shortage on coronavirus

The recent coronavirus which continued to plague China has led to expectations on a possible uplift in containerized scrap prices as there may be container shortages at western and European scrap origins, market sources said.

Containerized ferrous scrap prices may be garnering support from a potential shortage of containers at American and European scrap origins caused by the coronavirus outbreak in China, market sources say.

"There may be some shortages of containers as Chinese export numbers have taken a tumble during this crisis," a source from a regional container shipping liner said. "Let's not forget that China is a huge manufacturer, and a lot of manufacturing companies have cut production during this period; hence containers are not coming out."

Another shipping line source said that although the situation was not dire at the moment, shipping companies might consider repositioning empty containers from regions where there were surpluses but added that this would entail additional costs and might ultimately push container freight rates up.

"Our UK and Europe suppliers are not getting enough containers for them to be active in the market this week," an Asia-based scrap trader said. "And they have informed us that container freight has increased for March shipments."

"US West Coast shipments too have become more expensive now," another trader said. "It could be bullish from the Turkish gains, but it also could be because of fewer containers there as well, hard to tell which is weighing in more at this moment."

Containerized US HMS I/II 80:20 scrap offers Friday to Taiwan jumped $10 from Thursday to $230/mt CFR, and with fewer offers made available, market sources in Taiwan said. The price increase broke a bearish trend since the start of the year, in which prices fell a total of $50/mt.

Source: S&P Platts