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

US containerized ferrous scrap export prices fell on Thursday in tandem with a drop in iron ore prices after China issued steel production restrictions in the Tangshan province.


The Asian country’s latest move has raised questions about the suspension being extended to other regions due to its environmental flagging systems. Iron ore import prices in China fell on Mar 9 but have since started to rebound. 


Inquiries on both coasts dropped as most participants preferred to wait and see the repercussions of China’s next move if any. Some buyers, however, are aggressively bidding below market indication levels. For example, in New York, and throughout the East Coast bids were being heard as low as $385/mt fas for shredded scrap but sellers were not interested and maintained offers firm to achieve desired levels at around $400-405/mt fas. 


Market participants expect some near-term volatility in scrap prices influenced by China’s environment policies but believe scrap prices will remain strong due to a strong US domestic market, high steel prices, and solid global fundamentals. However, they remain uncertain about weaker demand and lower bids persisting amid seller resistance.


Prices have dropped on the West Coast amid lower containerized scrap offers from Japan that have reduced by $25-35/mt on lower domestic scrap prices and retreating Kanto auction rates. Lower Japanese export offers place pressure on US export offers on the West Coast. 


Southeast Asian mills and traders have actively lowered bids on both bulk and container prices. Mills prefer bulk inquiries, due to the limited container access and high freight prices on containers, especially, given the slight downward adjustment on bulk prices this week. Asian mills have been heard increasing finished steel prices on strong demand despite some softness in imported billet prices to China. Hence, while prices have softened, they are not pointing to a long or significant downturn.


The weekly Davis Indexes for containerized scrap in New York dropped by $18-27/mt on Thursday with #1 busheling and P&S 5ft falling by $18/mt to $429/mt fas and $406/mt fas, respectively. The index for HMS 1&2 (80:20) declined by $22/mt to $379/mt fas while shredded decreased by $20/mt to $402/mt fas. Machine turnings dropped by $27/mt to $336/mt fas as buyer interest dwindled. 


In Los Angeles, the weekly Davis Indexes decreased by $20-24/mt. The index for #1 busheling declined by $44/mt to $395/mt fas as domestic mills in Texas and the central US purchased fewer than expected volumes and exporters reduced interest on high prices. 


The indexes for HMS 1&2 (80:20) fell by $20/mt to $372/mt fas as P&S 5ft and shredded both decreased by $27/mt to $388/mt fas. The better grades at times have achieved an average $20-25/mt spread higher than HMS but the spread was narrowed to about $15/mt with the decline in inquiries this week. 


San Francisco’s weekly indexes eroded their gains from last week with price drops of $20-42/mt. The index for #1 busheling decreased by $42/mt to $393/mt fas, while HMS 1&2 (80:20) fell by $20/mt to $365/mt. P&S 5ft dropped by $28/mt to $380/mt fas as shredded declined by $25/mt also to $380/mt fas. 


In Seattle, the Davis Indexes followed the trend along both coasts with price losses of $15-32/mt. The index for #1 busheling shrank by $32/mt to $398/mt fas and HMS 1&2 (80:20) fell by $15/mt to $373/mt fas. P&S 5ft index declined by $22/mt to $388/mt fas and shredded decreased by $23/mt to $385/mt fas.

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