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

The US domestic ferrous scrap trade for March proceeded quickly after Thursday afternoon’s Midwest mill announcements of price increases of $50-70/gt. 


Cut and shredded grades were announced at buying prices up $50/gt against February settled prices while prime received a heftier increase of $70/gt buying offers against February prices. 


Market participants on both the buy and sell sides report that mill programs filled quickly, especially for local tonnage, and cited consensus was generally easily reached on price moves. The established trend was observed in several regions including Chicago, Detroit, Ohio Valley, and in the East and Southeast.


Although some pockets had higher consumer demand for prime grades such as #1 busheling, prices transacted above $70/gt for material purchased along the river into Chicago area mills as well as Detroit. In fact, a Detroit area mill was aggressively looking to purchase secondary materials and market participants noted remote, rail P&S 5ft from an outside region to a Detroit consumer was priced at a premium of $20-25/gt over prior local deals.


The #1 busheling grade has been in strong demand and the material traded with large ranges as some mills were forced to compete for it to meet program requirements. In Detroit, for example, #1 busheling transacted as high as $595/gt on Friday after some moved as low as $545/gt in early trading. Some rumors circulated earlier, of a standstill in Detroit, however, on Friday afternoon the main buyers and sellers in the region were unable to confirm any resistance and believe that activity is virtually complete in the region with residual deals ongoing.


In Philadelphia, a few grades traded softer while shredded moved more than the increased $50/gt trend. The monthly Davis Index for #1 busheling rose by $59/gt to settle at $509/gt delivered. Mills in the Philadelphia region offered #1 busheling at $475-500/gt on Thursday but adjusted it to $510/gt on Friday as material was difficult to secure at the lower value.


The Davis Index increased by $45/gt for #1 HMS to $405/gt delivered Philadelphia, while P&S 5ft rose by $55/gt to $415/gt delivered. Machine shop turnings increased by $36/gt to $328/gt delivered and shredded moved up $68/gt to $448/gt delivered Philadelphia consumer.


Mill interest differed depending on their immediate need. Some reduced their buying volumes slightly hoping for lower scrap prices in April while others increased them on immediate need. February contracted scrap is still being delivered in early March, making some mills comfortable with their monthly inventory forecast. 


Markets in the Carolinas met the same fate as the Midwest. Some shredded and P&S 5ft deals were reported receiving premium pricing but on limited occasions. The index for #1 busheling increased by $69/gt to $549/gt delivered while #1HMS rose by $50/gt to $403/gt delivered. P&S 5ft climbed by $53/gt to $421/gt delivered narrowing the gap with shredded as it increased by a narrower $48/gt to $424/gt delivered. The machine shop turnings index rose by $51/gt to $339/gt delivered.


Some regions are still negotiating and will settle on Monday. However, the overall trend of price increases ranging from $50-70/gt persists throughout most US markets, except Texas where mills and scrap yards were affected by harsh winter storms and the aftermath of electrical problems. The region is expected to have limited increases of $20-35/gt on secondary grades. 


In the Pacific Northwest, scrap prices increased by $30/gt on #1HMS and by $40/g on P&S 5ft and shredded grades, against February settled prices.

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