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

US containerized scrap prices declined on Thursday after 14 consecutive weeks of increases that began in early October. Scrap prices on the West Coast and East Coast decelerated after a peak late last week. The high-point for containerized prices was in tandem with the historic January US domestic ferrous trading week that saw prices surge by another $55-110/gt against deals concluded in December, though they varied by grade, region, and deal placements.


This month’s domestic trading encountered the reverse of December’s trend with transactions beginning higher but declining towards the end of the trading week. The expectation of a $10-20/gt downward trend in February trading along with buyer resistance from export markets placed pressure on containerized prices. 


Bids began to decline on Jan 6 but began to take shape in reduced offers and deals only in the past few days. Market participants on both coasts note reduced buyer interest or the absence of the usual players. Some buyers on the East Coast are claiming deals at deep discounts on P&S 5ft, #1 busheling, and HMS 1&2 (80:20). Shredded deals, however, remained stronger near the $440-455/mt fas level. 


Container export yards are reportedly panicking due to the softer demand and huge inventories against limited container availability over the past month, which has restrained fulfillment for some interested buyers. The upcoming Chinese Lunar New Year is also adding to the pause in transactions. Buyers are adopting a wait and see approach on the expectation of further short-term price declines. 


Japanese export offer prices have remained high on Chinese demand expectations. On the other hand, Chinese mills continue looking for scrap from the US, Japan, and Australia and are not engaging in deals at excessively high offer prices. Japanese domestic and export prices declined this week. South Korean, Taiwanese, and Vietnam buyers have reduced bids in the past week. Tokyo Steel declined buying levels for domestic scrap prices. 


Asian buyers are contending with weaker-than-expected demand in domestic and export markets and are stepping back to assess the remainder of Q1 and Q2 2021. Mills are actively lowering bids for imported scrap, diverting attention to the domestic scrap market, or withholding container or bulk buys pending further market clarity. 


The weekly Davis Indexes in New York slipped by $3/mt to $459/mt fas for #1 busheling. HMS 1&2 (80:20) and machine turnings both decreased by $6/mt to $422/mt fas and $350/mt fas, respectively. P&S 5ft reversed its gain from last week, falling $9/mt to $441/mt fas, and shredded encountered a more limited fall of $1/mt to $449/mt fas. Market participants note that buyers have withdrawn interest for P&S 5ft but shredded faces a better demand environment. 


In Los Angeles, the weekly Davis Indexes decreased after decelerating last week. The weekly index for #1 busheling decreased by $7/mt to $447/mt. HMS 1&2 (80:20), P&S 5ft, and shredded all dropped by $10/mt to $409/mt fas, $435/mt, and $435/mt fas, respectively. On the West Coast P&S 5ft and shredded has maintained a symbiotic pricing dynamic due to adequate demand for the grades. 


In San Francisco, the indexes declined by $5/mt to $446/mt fas for #1 busheling and both P&S 5ft and shredded to $436/mt fas. HMS 1&2 (80:20) decreased by $8/mt to $408/mt fas.


The Davis Indexes in Seattle for #1 busheling only ticked down $1/mt to $454/mt, HMS 1&2 (80:20) fell by $7/mt to $418/mt fas, P&S 5ft dropped by $9/mt to $434/mt fas, and shredded fell by $8/mt to $436/mt fas.


The daily Davis Index for Turkish imports of US-origin HMS 1&2 (80:20) declined by $1.08/mt to $478.75/mt cfr on Thursday. Turkish mills have been declining domestic scrap prices for the past several weeks. According to market participants, despite recent high bulk sales to Bangladesh, which are up by $8/mt against the prior week’s level, the last few transactions have reached the pricing peak. 


Several voiced the expectation that Turkish mills will correlate movements of upcoming bids and deals and, therefore, most likely trade imported scrap down $10-20/mt against recent deals. While Turkey trading refers to bulk versus container trades, Turkey informs the global scrap sentiment and the export dynamics in the US, especially, East Coast. 


The downward trend is further reinforced by contractions in dock prices in the EU heard on Thursday and reduction of higher dock buying prices that hit $400/gt on HMS 1&2 (80:20) in areas such as Houston to $360-380/gt delivered to docks.

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