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

US domestic ferrous scrap trade concluded for August with several markets maintaining the initial trajectory of unchanged price levels for #1 busheling and other prime grades. However, most Southeast and Southern markets, Philadelphia, and mills along the St. Louis River witnessed a $10/gt or more decline in primes. 


Overall, secondary materials including #1 HMS, P&S 5ft, and shredded fell by $20/gt against July settlements with Philadelphia being the lone market that deviated with secondary grades falling by $30/gt on continued, reduced mill demand.


In Houston, price movements varied by scrap dealer depending on July’s starting points and volumes with the general consensus of down $10/gt on #1 busheling and down $20/gt on secondary grades. Some dealers reported changes of down $10/gt while others reported prime at down $20/gt as well. 


The index for #1 busheling fell by $13/gt to $640/gt delivered Houston consumer as #1HMS fell by $16/gt to $428/gt delivered. P&S 5ft dropped by $22/gt to $463/gt delivered as shredded limited its fall by $18/gt to $473/gt on news of some last-minute shredded deals at higher prices to a regional mill. 


Some mills in various Midwest locations initially bid down $30/gt for shredded and other secondary grades though consensus prevailed and finalized with $20/gt declines. The Chicago monthly Davis Index for #1 busheling held flat at $633/gt delivered, #1 HMS fell $19/gt to $453/gt delivered mill, P&S 5ft dropped by $21/gt to $490/gt delivered, and shredded declined by $20/gt to $480/gt delivered Chicago consumer.


In Detroit, several mills reported limited tonnage requirements with some trailing deals reported Friday at below market levels. The Davis Index for #1 busheling held flat at $646/gt delivered, #1 HMS fell by $20/gt to $433/gt delivered, P&S 5ft dropped by $21/gt to $474/gt delivered, and shredded declined by $20/gt to $480/gt delivered Detroit consumer.


The effects of reduced mill demand carry into scrap alternative grades as well at present. Brazilian producers, in need of moving basic pig iron (BPI), have dropped sales prices into the US considerably this week with the most recent deal down by $32/mt and the weekly Davis Index for BPI at $586/mt cfr Nola on Friday. A month ago, on Jul 9 the Davis Index for BPI was $64/mt higher at $650/mt cfr Nola. 


Market participants believe the bearish sentiment may continue on ample material flows with the capability to improve by Q4. Still any potential scrap price erosion will be tempered by ongoing strength in steel pricing.


Some large dealers expressed the possibility of an increase in September, reversing this week’s losses, on tight feedstock flows in Texas while others in the Carolinas region noted that shredder supplies did not seem to be slowing down this week despite the price drop at the scales. Given the export situation, upcoming mill maintenance schedules, the possibility that some mills overstocked scrap, and overall seasonality, most are of the opinion that the scrap market will continue sideways to soft until November. 

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