Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

US containerized ferrous scrap indices climbed again for the sixth consecutive week on strong demand from Asia. However, a potential uncertainty in freight rates in December could limit the volumes transacted.


According to container sellers and buyers to Taiwan, quotes on prior freight rates are not working despite the demand for export transactions as they anticipate freight rates in December could range between $200-1,000/container. Container prices to Taiwan historically trend on the lower end of that range. Container availability is reported as difficult into January. 


Prices have surged since early October on export demand and tight scrap inventories on both coasts. The Davis Index for HMS 1&2 (80:20) has jumped by $37/mt to $286/mt fas Los Angeles since Oct 1, while the New York area HMS 1&2 (80:20) index surged to $302/mt fas on Thursday marking an increase of $47/mt from Oct 1. 


Scrap on the East Coast in bulk and containers was bolstered by higher Turkish import scrap prices where offers on HMS 1&2 (80:20) for US-sourced deals are currently at $335-340/mt cfr, with some sellers forecasting another hefty jump to $345-350/mt cfr given the strong demand for Turkish finished steel. 


Price expectations for the early December US domestic scrap trading week have firmed up from $10-30/gt to $30-50/gt depending on region, mill needs, and grades on tight feedstock flow, short working months at scrap yards, and strong demand at mills. 


Docks, especially on the Eastern coast, have also recently increased scrap prices on the expectation of higher bulk and container prices. US docks are heard to be paying premiums above list prices for sufficient tonnage, especially, structural steel that decreased in availability, due to lesser demolition projects. 


Japanese export scrap offers, an alternative to US-sourced scrap, are also on the rise. Lockdowns in the UK have shrunk feedstock and resulted in increased dock prices. Russia and Latin America are also increasing prices. On the other hand, Central American countries like Nicaragua and Honduras are suffering from unprecedented flooding, which will also affect scrap output management in the short-term. 


Indian buyers face high sponge iron and iron prices in the domestic market, which is increasing domestic scrap prices and supporting the rationale for higher imported scrap deals. Some buyers are waiting on the sidelines wondering whether bulk and container prices have hit the high point with potential correction. 


However, given the tight supplies and continued demand, sellers warn that prices could increase or at least remain unchanged through December. The likelihood of increases in the US export market are supported by the expected rise in US domestic prices. 


Pakistan and Bangladesh buyers are concerned about the second and third waves of the pandemic and near-term direction in finished steel demand should the recovery not continue but are accepting higher import offers on the need for raw material supplies. 


With potentially sufficient scrap inventories and recent deals for Japanese scrap, South Korean mills have accepted higher offers on containers but on limited volumes. Taiwan mills may hold on further deals given the limitation on container availability and higher scrap import prices. Mills may shift attention to domestic scrap supplies in the short-term. 


The weekly Davis Indexes in New York rose across all grades for the fifth consecutive week. The indexes for better grades such as #1 busheling increased by $19/mt to $330/mt fas, P&S 5ft climbed by $26/mt to $320/mt fas and shredded rose by $20/mt and $323/mt. The HMS 1&2 (80:20) index increased by $16/mt fas to $263/mt fas. 


In Los Angeles, the Davis Indexes leaped for the sixth consecutive week. The indexes for #1 busheling increased by $7/mt to $309/mt fas, P&S 5ft climbed by $3/mt to $305/mt fas, and shredded hiked by $6/mt and $309/mt. The HMS 1&2 (80:20) index increased by $10/mt fas to $286/mt fas. 


The Davis Indexes in San Francisco rose for #1busheling and HMS 1&2 (80:20) by $8/mt to $301/mt fas and $280/mt fas, respectively. P&S 5ft climbed by $7/mt to $301/mt fas as shredded gained slightly more with an increase of $10/mt to $304/mt.


In Seattle, the Davis indices also increased as Asian buyers scoured the region for available tonnage. The #1 busheling index increasing by $9/mt to $303/mt fas and HMS 1&2 (80:20) rose by $11/mt to $286/mt fas. P&S 5ft and shredded both increased by $8/mt to $303/mt fas each as the grades are trending in concert.

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