Canadian rail shutdown disrupts US imports of ferrous scrap

US ferrous scrap imports from Canada were put at risk as a labor dispute halted cross-border rail transport, which could support domestic US prime scrap prices in September domestic monthly trade negotiations if the disruption is prolonged.

A shutdown of Canada's rail network started Aug. 22 as a deadline for labor talks expired, snarling logistics for a range of commodities.

Canadian National Railway and Canadian Pacific Kansas City, the country's two major freight rail operators, started locking out workers at 12:01 am ET Aug. 22, saying they had failed to reach agreement with Teamsters Canada after months of contract talks.

The US imported 2.69 million mt of ferrous scrap from Canada by rail in 2023, compared to 542,442 mt by truck and 388,908 mt by ship last year, according to S&P Global Market Intelligence's Global Trade Atlas.

In the most recent month that trade data was available, the US imported 109,878 mt of ferrous scrap by rail from Canada in June, or 62% of the monthly total.

Canada was the top exporter of ferrous scrap to the US in the first six months of 2024 with 1.08 million mt, followed distantly by Mexico with 118,586 mt and the Netherlands with 107,681 mt.

The grade of ferrous scrap received by the US from Canada in the largest volume in the January-June period was shredded scrap at 425,055 mt, followed by bundles of No. 1 busheling with 258,908 mt. But Canadian auto plants and other manufacturing facilities have a larger role in the overall supply of No. 1 busheling in the US market compared to shredded scrap, an obsolete grade with a much greater volume produced domestically in the US.

Declining US ferrous scrap export prices have exerted downward pressure on the domestic market ahead of the early September buy-week, but a disruption to prime scrap imports from Canada could provide enough support to keep prices for No. 1 busheling from falling, a scrap dealer in the Mid-Atlantic said.

"I think the Canadian rail strike will solidify primes, while export will push down shred and cuts," the dealer said.

Platts assessed prices for No. 1 busheling at $385 per long ton delivered Midwest Aug. 21, up from $380/lt one month earlier. Domestic shredded scrap was last assessed at $375/lt delivered Midwest Aug. 21, unchanged from one month earlier.

Export prices for shredded scrap were assessed at $353/mt on an FOB US East Coast basis Aug. 21, down from $379.50/mt one month earlier.

Platts is part of S&P Global Commodity Insights.