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

US containerized scrap prices and corresponding indexes trended up for the 14th consecutive week on the West Coast and continued the positive traction on the East Coast on Thursday. 


Despite the higher indexes on improved deal prices last week and early this week, bids were beginning to decline slightly on Wednesday. The unusual demand dynamics and elevated prices are making it difficult to forecast if the current softness is only a temporary lull. Some traders believe that buyer hesitation is only temporary since global scrap supplies are tight on high demand from steelmakers across the world, while others believe that the containerized scrap market may have peaked early this week.


On the West Coast, containerized HMS 1&2 (80:20) deals were reported as high as $425-430/mt fas last week, but are now reported predominantly at $415-420/mt fas with a sale in the past 24 hours at $410/mt fas. 


On the East Coast, a seller noted the placement of containerized shredded material at $450-465/mt fas earlier in the week but a higher probability of placement of the same material at $440-445/mt fas in the next few days on present inquiries. If the trend continues, containerized indexes may decline next week. 


The weekly Davis Indexes in New York increased by $18/mt to $462/mt fas for #1 busheling. HMS 1&2 (80:20) increased by $16/mt to $428/mt fas, while both P&S 5ft and shredded rose by $9/mt and $11/mt, respectively, to trend at $450/mt fas. Machine shop turnings increased by $16/mt to $356/mt fas. 


The weekly Davis Indexes in Los Angeles decelerated from rises of $13-24/mt last week to $2-9/mt this week. The weekly index for #1 busheling increased by $4/mt to $454/mt. HMS 1&2 (80:20) rose by $2/mt to $419/mt fas and P&S 5ft increased by $8/mt to $445/mt. Shredded increased by $9/mt to $446/mt fas. The HMS 1&2 (80:20) index has climbed by $120/mt over the past month.


Tight scrap supplies and feedstock continue throughout the West Coast due to the limited availability of ships and containers negatively affecting sellers’ ability to contract orders. On the other side, buyers are withdrawing quote requests or exiting the market temporarily because of massive container issues. 


In San Francisco, the indexes increased by $3-7/mt compared with $15-27/mt increases last week. The index for #1busheling rose by $6/mt to $451/mt fas, HMS 1&2 (80:20) climbed by $3/mt to $416/mt fas, and both P&S 5ft and shredded climbed by $7/mt and $4/mt, respectively, to $441/mt fas. 


The Davis Indexes in Seattle for HMS 1&2 (80:20) and P&S 5ft increased by $3/mt to $425/mt fas and $443/mt fas, respectively. The index for #1 busheling rose by $7/mt to $455/mt and the index for shredded climbed by $4/mt to $444/mt fas.


Mixed signals for Q1 2021 continue

US domestic scrap prices launched this week in Detroit at up $100/gt on primes and $90/gt on secondary grades against December settled prices. In some markets, higher steel prices may influence the budget of infrastructure projects. Scrap sellers are noting a continued firm demand for scrap, especially, the better grades, but note that buyers are less aggressive and maintaining lower firm bid prices. 


Markets in Asia for finished steel products and scrap were waiting on cues in early January. Chinese futures rally and increases in HRC list prices are adding to the positive sentiment in Asia this week. Greater steel buying interest throughout Asia into March and April is supporting the continuation of demand for imported scrap deals in January and February.


The latest $480/mt cfr Turkey deal on HMS 1&2 (80:20) is higher by $7/mt against a Dec 24 deal from the same vendor. The deal lifted the sentiment that Turkey may be limited in applying downward pressure on its imported scrap prices. 


Japanese export scrap prices continue to support overall domestic and export demand, especially, the possibility of strong sales to Chinese mills, thereby, limiting supply to the remaining buyers.


Indian mills are encountering lower domestic scrap and shipbreaking prices, which may encourage domestic sourcing in a period of high import prices. The downward trend though is expected to remain only in the short-term as India is a net scrap importer and stimulus activity along with seasonal effect are expected to keep production levels high at mills. 


South Korean, Taiwanese, Bangladeshi, and other buyers are also noting hesitancy given the high imported scrap prices but sellers note that mills may need to proceed with container and bulk buys despite elevated prices to keep operating and meet steel demand. Slight corrections are expected in Spring 2021.

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