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

Ferrous scrap trade for April commenced on Monday, earlier than anticipated, after a couple of major Detroit mills announced offer levels at no price change for prime grades such as #1 busheling and at $20/gt decreases for secondary grades including shredded, compared to March settlements.


These price levels are likely to be supported by scrap dealers as they are in line with expectations of prices tempering down from March settled prices. Some regions with tighter prime supplies may have more room for increased price potential on the grade. Secondary grades, on the other hand, are well supplied, and decreases are in line with the outlook. Still, prime strength is upholding secondary grades from declining too much as the gap is already wider than normal between the two grades.


Based on the trend, #1 busheling will remain at around $560-570/gt in the Detroit region with shredded falling to $430-440/gt. Other regions are expected to transact shortly with similar price points that were established in the Midwest.


In the Southeast, opinions vary between most sellers accepting downward pricing and some mills potentially conceding only a $10/gt drop in secondary grades and a premium of $10/gt on primes due to high demand. Texas is expected to trade sideways on primes with gains of $10-30/gt on secondary grades to balance the unusual, dampened March trades. 


Basic pig iron (BPI) imports into the US have held firm since Mar 5, with BPI currently trading at $565-575/mt cfr Nola most recently, as activity picked up after a month-long lull. Pig iron is actively trading into the US, China, Italy, and Turkey. The material has been in higher demand and moving as a prime grade replacement since #1 busheling has evaporated on the microchip shortage.


US domestic HRC prices are being heard on some spot deals at as high as $1,466/mt (1,330/nt) fob mill with most deals at $1,411-1,455/mt ($1,280-1,320/nt) fob mill. The high HRC prices are supporting scrap prices despite increases in volume due to seasonal effects. HRC prices are also hitting record-breaking status throughout Asia and high import prices are being faced by buyers on the limited imports to the US. 


The stronger US domestic scrap market is expected to result in slightly higher import scrap prices for Turkish mills, which would support global ferrous trading levels for the month. Traders that sell to Mexican mills are reporting a regular or average demand cycle with no immediate buying frenzy on fear of inflationary scrap prices. Additionally, many steel end consumers in regions such as Northern Mexico are highly linked to the automotive supply chain output changes.

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