East Coast export yards squeezed as Atlantic backhaul shortage lifts freight
Cargo economics out of Baltimore and Camden have deteriorated by roughly $14 a tonne since May, pushing at least two exporters to clear bulk cargoes into the domestic market instead.
Freight costs on the transatlantic scrap route have climbed sharply since May, and East Coast export yards say the move has erased most of the margin that made bulk cargoes competitive with domestic sales.
Supramax rates from the US East Coast to eastern Mediterranean discharge ports have moved to around $47 a tonne from roughly $33 in early May, according to three chartering desks contacted by RecyclerWorld. The rise is being attributed less to scrap demand than to a thin backhaul market — grain and coal programmes out of the Gulf have pulled tonnage away from the North Atlantic, leaving fewer ballasters willing to position for a scrap fixture.
The arbitrage closes
The practical effect is that HMS 1&2 (80:20) cargoes that penciled at a workable margin in April no longer do. Two exporters said they had diverted material to domestic consumers in July for the first time this year.
“We had a cargo half-built and we broke it up,” said Ellis Maddox, general manager at Tidewater Ferrous Terminals, which operates a deepwater berth in the mid-Atlantic. “Selling into the domestic market at a discount to what we thought we would get is not a good outcome, but it beats paying demurrage while we wait for a ship that wants to come here.”
Delivered CFR values into Turkish ports have been broadly steady, which is what makes this a freight story rather than a demand story. Buyers on that end are not paying less; sellers on this end are receiving less.
Yard-level consequences
Export yards typically compete for dealer tonnage on the seaboard by paying a modest premium to inland mill netbacks. When the arbitrage closes, that premium disappears and dealers within trucking distance of the terminals see their alternatives narrow to one.
Several smaller dealers in the Delaware Valley reported that export buying prices for HMS had fallen $18 to $25 a gross ton since mid-June, and that at least one terminal had gone to a nomination system, accepting deliveries only against a confirmed cargo.
“The terminal used to be our leverage. Now it is a phone call that does not get returned,” one dealer said, asking not to be named because he continues to sell to both terminals in his market.
Watch the ballast decision
Chartering brokers say the situation is self-correcting, but on a lag. Higher North Atlantic rates eventually attract ballasters from other basins, which adds supply and pulls rates back. The lag is typically four to eight weeks, and it depends heavily on what the Gulf grain programme does through late summer.
The other variable is discharge-end appetite. If Turkish mills step back on scrap buying to work through inventory, the freight relief will arrive at the same moment the demand does not — and East Coast yards will have absorbed the freight hit for nothing.
For now, exporters are shortening their positions. Two said they had stopped quoting forward beyond three weeks and were building cargoes only against firm sales, a defensive posture that itself removes bid support from the dealer market.
