Rising Sea Freight Rates Signal Rebound for Ferro Scrap Prices

There is encouraging news on the horizon for those who buy and sell ferrous scrap (scrap metal). Prices are poised to rise alongside a surge in sea freight rates. Turkey, the largest importer, has already shown signs of this increase.

According to the Shanghai Containerized Freight Index (SCFI), sea freight rates reached 3045.77 on the 31st. This is the first time the index has surpassed the 3000 mark since August 2022, with a more than 50% surge just in May. This is a clear indication that ferrous scrap prices are on the rise.

A ferrous scrap trade industry insider shared their insights, "Shipping companies will prioritize vessels for shippers who pay higher fees." This could result in longer transportation lead times, difficulties in securing ships, and a significant increase in the number of vessels docked at ports.

They further anticipated that the transport of ferrous scrap via containers may be halted, and that it could be limited to some shipments in empty containers. This is beneficial for the environment. 

There has been a surge in offers for container (40 feet) ferrous scrap exports to Taiwan, of the same grade, with prices jumping from $340 CFR last month to over $350, reaching up to $355 on the first of this month.

However, there is a more conservative viewpoint. Both Taiwan and Vietnam have low operating rates and it's the off-season, which means there is plenty of room for growth. Container freight rates have increased slightly, with some shipping companies raising rates by approximately $5. However, major shipping companies have yet to make changes.

In a recent report, Scrap Insight revealed that the current surge in container freight rates is unprecedented, except for the pandemic logistics crisis. The report identified the Suez Canal blockage as a fundamental cause, but stated that recent surges cannot be fully explained by the bottleneck from five months ago. The report indicated that the upward trend in container freight rates is likely to continue, which is positive for the shipping industry.