Offer prices in the Argentinian ferrous scrap market are up 50% in February compared with January levels, a reflection of the steep devaluation of its currency, sources said Wednesday.
On January 23, the central bank of Argentina scaled back its currency controls, with the Argentinian Peso falling from 7 Pesos/$1 to 8.5 Pesos/$1.
This measure prompted scrap prices to rise to Argentinian Pesos 1,200/mt ($154/mt) CIF from Argentinian Pesos 800/mt ($102/mt) CIF previously.
The currency exchange rate Wednesday was 7.78 Pesos/$1.
"The automotive industry continues to be the main booster of ferrous scrap demand [from the steel sector], but we cannot expect the market to pick up with this devaluation. Several scrap dealers are close to declaring bankruptcy," said one source.
Some Argentinian scrap dealers say shipments remain low, while others have cut back their operations compared with the end of 2013 or beginning of 2014. Moreover, exports of ferrous scrap in Argentina are not permitted by the government.
Argentina's automotive production in 2013 was 3.5% higher year on year, according to trade association Adefa, at 791,007 vehicles, compared with 764,495 units in 2012.
The ferrous scrap market is focused on supplying the country's main steel businesses, including the Techint group's Tenaris Siderca and Ternium Siderar units, which buy around 60% of the ferrous scrap sold in Argentina, followed by ArcelorMittal's Acindar with 30% and Votorantim's Aceros Bragado with 10% of the total consumption.
