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

US containerized scrap prices continued to trend up for the 11th consecutive week on the West Coast. On the East Coast, most containerized grades also increased, but there were hints of deals at softer prices against last week.


Last week, container indexes surged by $34-51/mt on the East Coast and by $54-70/mt on the West. The first signs of the uptrend diverging on both coasts emerged this week with the indexes for all grades on the West Coast rising further by $17-38/mt. On the East Coast, the indexes rose except for HMS 1&2 (80:20) and machine shop turnings, which declined.


In New York, some sellers reported deals at higher prices compared to a week ago while buyers reported successfully making container buys at lower prices than a week ago on price resistance. In fact, one large buyer noted that downstream industries were resisting expensive finished steel as they were unwilling to accept the upcharge on higher raw material prices. 


Some markets are also expected to resist higher-priced deals because of muted demand due to rising COVID-19 infections, which could reduce inquiries for imported scrap in the next few weeks. Reports of mutant COVID-19 strains and the yet unknown effect of vaccines is adding uncertainty to the market. Softer iron ore prices could also influence softer scrap prices. 


However, sellers note that an uptrend will likely remain due to the continued tight scrap supply flows, winter seasons in the largest scrap export markets, the possibility of China seeking scrap volumes for import, and strong Q1 mill activity to meet order books.   


The US domestic scrap market continues with forecasts of $50-80/gt increases in the early January trading week against December settled prices. Dock prices have increased on both coasts as mills compete for scrap inventories. Even from the distant West Coast, scrap has been flowing to destinations in the central US and Texas. 


There is strong demand for West Coast scrap from Mexico and South America.  Mexican scrap buyers have remained active throughout the Southwest to Southeast and East Coast as domestic scrap supplies continue weak due to lower peddler activity influenced by COVID-19 concerns. 


To date, global scrap prices have received support from the current boom in scrap demand in the latter part of 2020. The latest Turkish import scrap deals at $450-464/mt cfr on HMS 1&2 (80:20) are $92-106/mt higher from the beginning of the month. 


The weekly Davis Indexes in New York rose by $1/mt to $421/mt fas for #1 busheling, by $6/mt to $418/mt fas for P&S 5ft, and by $4/mt to $415/mt fas for shredded scrap. HMS 1&2 (80:20), however, declined by $4/mt to $387/mt fas and machine shop turnings slipped by $24/mt to $329/mt fas this week with some deals reported as low as $315/mt fas. 


The Davis Indexes in Los Angeles rose by $26/mt for #1 busheling, P&S 5ft, and shredded to $426/mt fas, $423/mt fas, and $424/mt fas, respectively. The HMS 1&2 (80:20) index rose by $28/mt to $401/mt fas and was up by $102/mt from Dec 3. Trades to Taiwan for the grade were reported at $435/mt cfr with an additional $30/mt for P&S 5ft. 


Some buyers reported not quoting much from the West Coast as it is hard to book containers due to the limited availability in the region. One buyer reported no buys in the past two weeks, while another noted that some suppliers were willing to sell at a slight discount if valid bookings can load earlier. 


Several market participants reported withdrawing from the market until early January in anticipation of higher export prices and an opportunity to increase processed scrap inventories during the continued low incoming feedstock period. 


In San Francisco, the index for #1busheling rose by $18/mt to $418/mt fas and HMS 1&2 (80:20) climbed by $30/mt to $398/mt fas. The indexes for both P&S 5ft and shredded increased by $17/mt to $415/mt fas, respectively. Freight rates in San Francisco trend higher than those in Los Angeles. 


The Davis Indexes in Seattle for #1 busheling increased by $38/mt to $436/mt fas and HMS 1&2 (80:20) climbed by $37/mt to $410/mt fas. P&S 5ft increased by $34/mt to $429/mt fas as shredded rose by $35/mt to $430/mt fas.


Asian demand continues

Limited trades were heard from Pakistan buyers after national billet trading was halted in some regions, with buyers who need raw material likely to return in early January. Scrap import inquiries remained active from Bangladesh where domestic finished steel demand in rebar is weak and may limit the ability to factor in higher input costs into sales prices. Indian prices on billet and rebar softened in some regions on weaker demand and may move bid prices lower for imported scrap.   


Domestic scrap prices have increased in Pakistan, India, South Korea, Vietnam, Japan, and other countries supported by rising imported scrap prices. The local prices might decrease in the next few weeks if imported scrap tags fall, depending on how the current trends play out. However, some market participants note that mill capacity utilization goals must be factored in given the limited domestic scrap inventories. 

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