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

US containerized ferrous scrap indices climbed robustly for the fifth consecutive week on strong demand from Asia. The Davis index for HMS 1&2 (80:20) is now at $276/mt fas Los Angeles port, up $27/mt from Oct 1. The New York area HMS 1&2 (80:20) index increased by $26/mt from $255/mt fas on October 1 to $281/mt fas on Thursday.


Finished steel prices throughout Asia continue climbing on higher raw material prices. Buyers remained wary of higher buying prices, worried that domestic demand may not materialize as expected in early January. 


Market participants reported expectations of higher US domestic scrap prices in the December and January trading weeks, tight feedstock flows, and low scrap inventories which support the higher export prices. Docks 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. 


Turkish mills are now buying bulk scrap at $306.50/mt cfr on HMS1&2 (80:20) from the US, supporting expectations of a new floor rate on global scrap prices for the remainder of the year. Offers to Turkey out of the US East Coast are being heard at a minimum of $310/mt cfr on the grade. Turkish HRC is heard to be placing tonnage destined for East Asian Markets. South Korea and Japan have also become top suppliers to Turkey of HRC material in recent months, showing the return of circular demand and an active worldwide steel demand recovery.


Alternatives to US-sourced scrap such as Japan, EU, UK, Latin America, and Russia have also increased prices. Japanese domestic and export prices increased on Wednesday after the results from the Kanto Tetsugen scrap auction. Tokyo domestic scrap prices increased by $14/mt as export bids in the auction increased by $21/mt. Japanese export yards are now offering HMS 1&2 (50:50) at prices up by $15-20/mt, compared to a week ago. Negotiations at higher prices are heard to be ongoing, but no transactions have been reported. These bookings are expected to recover, supported by continued steel imports from China and higher HRC prices on improving demand in Vietnam, India, and Europe.


Vietnamese buyers shifted interest for bulk buys and are expected to continue making inquiries for containerized scrap this week at higher prices. Given the need for imported scrap to meet production objectives, buyers are expected to rise bid prices given as more alternatives become available to US sellers. 


Buyers from Indian, Pakistan, and Bangladesh are expected to continue with demand despite higher prices. The countries are facing historically high prices and are balancing them with concerns about domestic finished steel performance. In the case of Pakistan, its currency appreciation could support imports. Some Indian buyers are on pause due to the Diwali festival but expectations of the economic recovery gaining momentum upon return from the holiday and into Q1 2021 have most market participants expecting the same to firm containerized prices through the end of the year. The Indian government has recently announced further stimulus efforts that will support steel demand. 


Market participants report higher freight costs to Asia. Freight prices to Taiwan are up $5-7/mt over last month. Market participants state that the issue is not only tight scrap inventories but also the availability of containers through January .


The weekly Davis Indexes in New York rose across all grades for the fourth consecutive week. The indexes for #1 busheling and HMS1&2 (80:20) rose by $8/mt to $311/m fas and $281/mt fas, respectively. The index for P&S 5ft climbed by $4/mt to $294/mt fas as shredded increased by $6/mt to $303/mt fas. Machine shop turnings increased to $247/mt fas after trending unchanged in last week’s index. 


The Davis Indexes in Los Angeles climbed for the fifth consecutive week. While holidays in Asia and buyer hesitation on increasing scrap import prices has slowed down volume buys, market participants report continued deals at higher prices. The indexes for #1 busheling and shredded jumped by $14/mt to $302/mt fas and $303/mt, respectively. The HMS 1&2 (80:20) index rose by $9/mt fas to $276/mt fas as P&S 5ft climbed by $13/mt to $302/mt fas. 


The Davis Indexes in San Francisco rose for #1busheling by $9/mt to $293/mt fas, HMS 1&2 (80:20) increased by $10/mt to $272/mt fas. P&S5ft and shredded climbed by $11/mt to both now at $294/mt fas. 


The Davis indices for Seattle also followed the upward price trend as Asian buyers continued seeking scrap, willing to pay a premium for higher grades. The indexes climbed with #1 busheling increasing by $6/mt to $294/mt fas and HMS 1&2 (80:20) rising by $5/mt to $275/mt fas and $270/mt fas, respectively. P&S 5ft rose by $10/mt to $295/mt fas as shredded increased $7/mt to $295/mt fas.

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