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

US containerized ferrous scrap indices increased for the second consecutive week after being rangebound in early October. 


The increase in the US containerized scrap market is being driven by a range of factors. They include South Asian buyers looking to import scrap from the US amid diminishing inventories and rising prices in their local markets, a slow return of Indonesian mills to the scrap market, active requirements until January from Southeast Asia, and higher bulk deals and export prices in Japanese and Russian markets. 


The US domestic scrap market has continued to firm up as November approaches after the initial softness turned to a sideways expectation by mid-October and now several East Coast dealers expecting a strong-sideways of plus $5-10/gt on shredded and P&S 5ft. Tight scrap inventories, strong iron prices, and active ferrous export inquiries are also expected to support containerized prices through the end of the month. 


The weekly Davis Indexes in New York increased across all grades with the index for #1 busheling rising by $9/mt fas to $295/mt fas, HMS1&2 (80:20) increasing by $10/mt to $263/mt fas, P&S 5ft climbing by $5/mt to $281/mt fas, and shredded moving up by $6/mt to $285/mt fas. Machine shop turnings, which tend to encounter more volatile weekly moves, declined by $11/mt last week but regained $16/mt to $240/mt fas as buying interest increased from India. 


In Los Angeles the Davis Indexes rose across most grades for the second consecutive week with HMS 1&2 (80:20) increasing by $1/mt to $256/mt fas, P&S 5 ft rising by $4/mt to $278/mt fast and shredded moving up by $3/mt to $275/mt fas. The index for busheling declined last week by $6/mt but regained the amount to return to $275/mt fas. 


Several buyers note the discrepancy in the quality of #1 busheling from the West Coast against melting needs, which caused concerns and limited buying volumes. Additionally, the limited interest has resulted in continued oversupply in Los Angeles. Multiple bids on P&S 5ft were heard at $280-285/mt on Thursday on a limited inventory of bonus grades.


Economic recovery, stimulus packages, the launch of infrastructure projects, and higher finished steel prices are supporting the positive end of the year sentiment for finished steel sales in Asian markets, despite concerns over rising raw material prices.


Hot-rolled coil (HRC) and cold-rolled coil (CRC) prices in the US, China, India, and EU have firmed up by 1-4pc on fob basis. Ex-warehouse HRC and CRC prices in Turkey have declined by 1-2pc while Russian CRC and HRC prices were flat and down 3pc, respectively. Asian markets are concerned about the decline in Russian and Turkish prices, but the increase in import orders from those countries along with the firm pricing in import materials could buoy those finished steel sources. 


Japanese export volumes, an alternative to US-sourced scrap, increased export offers this week amid higher domestic scrap prices. The shift from discounts offered last week provided US export prices with additional support.  


The Davis Indexes in San Francisco increased with HMS 1&2 (80:20) rising by $4/mt to $248/mt fas, P&S5ft increasing by $7/mt to $270/mt fas, and shredded lifting by $6/mt fast to $271/mt fas. The index for #1 busheling decreased by $1/mt last week but shifted direction to gain $3/mt this week to $269/mt fas.

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