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

US containerized ferrous scrap indices decreased on the East Coast for the third consecutive week and declined for the second straight week on the West Coast. Higher-priced offers did not find many buyers amid uncertainty in their domestic markets and some Asian buyers retreating on holiday. 


The weekly Davis Indexes in New York decreased across most grades with HMS1&2 (80:20) and #1 busheling declining by $5/mt fas to $255/mt fas and $285/mt fas, respectively, while P&S 5ft slipped by $3/mt to $274/mt fas. Shredded scrap was flat at $276/mt fas. The index for machine shop turnings, given its wider price variation tendencies, was the only one to increase by $3/mt to $236/mt fas. 


Shredded scrap containers were available on-demand with offers up to $280-290/mt fas. However, most deals were reported at $275-280/mt fas. Some sellers are not willing to conclude deals on discounted prices as they expect a rebound shortly despite lower inquiries and deals over the past week as Asian buyers sort out the Q4 2020 dynamics. However, some buyers, especially from India, proceeded with higher-priced deals as they were not certain about prices softening soon. 


The Los Angeles Davis Indexes for containerized scrap dropped with #1 busheling and P&S 5 ft both slipping by $7/mt to $276/mt fas and $273/mt fas, respectively. The index for HMS 1&2 (80:20) declined by $14/mt to $249/mt fas, while shredded fell by $8/mt to $276/mt fas. 


Deals in LA began to soften in the week ending Sep 18 and have continued to decline as October arrives. Transactions, which were reported at around $265-268/mt fas in mid-September, have now slipped to $240-250/mt fas, down $18-25/mt fas. 


Taiwan began to reduce buying activity last week and has remained subdued as businesses close for a national holiday from Oct 1-4. Those seeking containers are taking advantage of this opportunity to engage some inventories. However, several dealers are reportedly holding on to inventories and even buying at lower prices from those that must sell due to cash flow issues in anticipation of prices rebounding over the next two weeks. 


The Davis Indexes decreased this week driven by the transaction levels of the limited market activity, but several sellers indicated that market levels should be higher by $10-15/mt given the limited scrap inventories even at the docks.


HMS 1&2 (80:20) deals declined more significantly this week compared to higher grades because of the absence of Taiwan buyers and a temporary realignment as Asian buyers assess the situation. However, P&S 5ft, shredded, and busheling indexes declined less as buyers have maintained an interest in better grades for improved melting at mills. 


Higher container activity is anticipated in mid-October and November as many Asian mills that remained on the sidelines in September are expected to return. Indonesian buyers could also return to containers by the end of October, pending licensing for the new Indonesian import requirements. 


Import destinations have delayed ferrous scrap buys on lower finished steel prices and concerns over China’s pricing fluctuations, which could see additional material on their shores as well as the limited export potential to China. Several market participants, though, expressed confidence that the Asian nation is aligning its steel industry, construction activities, and additional stimulus plans for domestic growth. The focus on domestic growth and consumption of its own steel as well as imported material would support the recovery of Asian countries while supporting regional prices in Q4 2020 and Q1 2021.


The Davis Indexes in San Francisco decreased with HMS 1&2 (80:20) slipping by $19/mt to $234/mt fas, #1 busheling falling by $6/mt to $267/mt fas, P&S 5ft decreasing by $13/mt fas to $260/mt fas and shredded dropping by $14/mt fas to $264/mt fas.


In Seattle, the container indexes decreased by $3/mt to $270/mt fas for #1 busheling, $15/mt to $243/mt fas for HMS 1&2 (80:20), $6/mt to $267/mt fas for P&S 5ft, and by $5/mt to $270/mt fas for shredded.

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