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

Sentiment for US exports continued eroding throughout the week, according to market participants. Demand on the West Coast has been hampered by COVID-19-related lockdowns in India, Malaysia, Thailand, and Vietnam, while low container availability has been a persistent problem. Moreover, high freight rates are being exacerbated by limited freightliner availability.


On Friday, Houston dock prices fell by $45/gt after the $40-50/gt decline in Tuesday dock price Indexes. Some dock prices in Houston that will be incorporated into next week’s Indexes are now at $100/gt for shredder feed, $115/gt HMS 80:20, and $140 P&S. The Davis Indexes in Houston this week were at $160/gt delivered for HMS 1&2 (80:20), $185/gt delivered for P&S 5ft, and $115/gt delivered for shredder feed. These new prices will lower indexes even more if current trends continue.


In San Francisco, the Davis Indexes this week were at $167/gt delivered for HMS 1&2 (80:20), $175/gt delivered for P&S 5ft, and $112/gt delivered for shredder feed. The latest dock price declines brought HMS 1&2 (80:20) down to $146/gt, which other scrap sellers said could decrease even more because there’s no short-term product placement in Asian markets.


Prices also dropped in the Portland area on Friday. Some sellers reported delivered dock prices for HMS 1&2 at around $163/gt. The Davis Index this week for HMS 1&2 (80:20) was reported at $167/gt.


Premium high grades widened against HMS 1&2 (80:20) earlier in the week as those few mills with appetite preferred higher grade material in LA. Dock prices in LA did not decline at end of the week.


The daily Davis Index for Turkish imports of US-origin HMS 1&2 (80:20) decreased by $6/mt to $207.50/mt cfr on Friday after a fresh sale from the Baltic region was reported. Overall demand for scrap is weak in Turkey, as most mills believe scrap prices will decrease again next week, and Turkish domestic and export rebar sales are sluggish. 


Turkey’s low demand for scrap in tandem with supply chain constraints to other customary destinations have left East Coast sellers writing off April as a lost month because of too much uncertainty. Instead, they’re hoping that, by late next month, there is some clarity on what the May-July markets will look like.


The downtrend in export markets will pressure US domestic scrap prices in early April. Some market participants believe prices will decline by $40-80/gt compared to March settled prices with the predominant consensus at the moment at $50/gt—with some variances based on grade and region. April scrap supplies will see substantially fewer prime grade volumes because automotive facilities have suspended production. While scrap yards have reported less incoming material, some yards in the Midwest, and possibly elsewhere, have used state guidelines to decline buying from peddlers.


A variety of mills have maintenance shutdowns scheduled for April. Some dealers wondered whether those shutdowns could be extended a couple of more weeks until automotive plants resume production.


Market participants in structural steel material such as rebar encountered strong shipping weeks in March and requests for accelerated deliveries into April. However, the booking trend by distributors for orders into May and June has also been characterized as one of the “worst booking weeks in recent history,” which points to potential holes in supply and demand unless end customers get confident about proceeding with projects.

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