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

April domestic ferrous scrap trading moved slowly but wrapped up on Tuesday at price discounts of $20-30/gt for prime and $30-50/gt for secondary materials, compared to March settled prices, in most US markets. 


Feedstock flow into yards was slow but so was demand as mills adjusted to scrap buys to lower internal production. Depending on region and yard some reported 70-75pc decline in scrap volumes sold compared to tonnage that moved in March. 


Several mills did not purchase any scrap for April delivery, however, there was enough mill buying to keep pricing above the lowest March projections for April which had some fearing a price erosion of $50-80/gt compared to March settled prices.


Chicago, Cleveland, Detroit, Indianapolis, Pittsburgh, and the Carolinas confirmed prime grade settlements at $30/gt down and shredded/cut grades at $50/gt down, although some late sales for obsolete grades were reported in the Midwest at a $35/gt discount from March. 


In Chicago, the Davis Index for #1busheling dropped by $31/gt to $271/gt delivered, while the indices for HMS 1&2 (80:20) decreased by $53/gt to $187/gt delivered, P&S 5ft declined by $53/gt to $209/gt delivered, and shredded decreased by $51/gt to $229/gt delivered.


Philadelphia, influenced by exports, settled at $20/gt down for primes and $30-45/gt down on shredded and cuts, compared to March prices. Buying activity from Turkey has resumed and docks have raised scale prices by $10-15/gt since April 7, with some offers $20/gt above that and as high as $185/gt for HMS 1&2 (80:20) delivered Philadelphia dock.


East Coast dock activity helped keep pricing from dropping to its lowest levels in the Philadelphia region. Some market participants report that demand has not been met entirely, mostly on prime grades but also for some obsolete grades. 


The southern region confirmed settlements at price discounts of $20-30/gt for prime grades and $40-50/gt for secondary material compared to March settled prices. For example, in Houston the Davis Index for #1busheling declined by $20/gt to $285/gt delivered, HMS 1&2 (80:20) decreased by $46/gt to $203/gt delivered, P&S 5ft declined by $46/gt to $227/gt delivered, and shredded decreased by $43/gt to $245/gt delivered.


In most regions, scrap flowed at a pace that met the muted mill demand for now. The $50/gt drop on cuts and shred, however, will considerably slow the flow of obsolete grades into yards through April.


Many dealers throughout the US sat out this month, due to prices, lack of material, or lack of mill demand. Some scrap yards reported that prices were unattractive and opted to withhold the little inventory for the early May scrap trading week. 


Some market participants expressed the possibility that given the wide uncertainty on COVID-19 policies and lack of understanding of associated health risks, May could turn out to again be a dismal month for sellers. Depending on the situation, a few felt they could wait until June while others were undecided.   


The domestic scrap market in May is dependent on industrial and automotive continuation of production, which will likely bring improved market conditions by June. Crude oil supply reductions should also lead to a recovery that will improve markets and pricing globally, but its overall influence and relevance will depend on timing. 

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