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

Ferrous scrap trading for the June cycle will be underway this week with most US market participants anticipating price increases of $40-50/gt across all grades compared to the tempered upside in May settled prices, especially in the East Coast and Midwest. 


On average, prices are expected to rise by $30-60/gt against May settled prices while some maintain bolder projections of $75-100/gt in possible price growth. Expected price movements also differ based on suppliers and regional factors.


The bullish outlook derives from various influences including strong export activity, pig iron import price levels, and restricted scrap availability on low mill as well as dealer inventories. There are also reports of healthy order books and resulting mill demand as several scrap consumers conveyed having solid buy programs for June.


The more moderated opinions come from sellers witnessing ample scrap flows, especially among secondary grades that include shredded, P&S 5ft, and #1 HMS. Certain areas do not envision mills will bid above $30-40/gt. 


Market participants noted the recent explosion at Evraz’s Colorado steel mill that will likely result in limited to no scrap buys for June consumption for that mill and preliminary rumors that some Gerdau locations will process limited buys. The Texas region expects a more tempered increase in the June trading cycle than the Midwest on high scrap inventories at yards. 


Southeast scrap sellers report expectations of $50/gt on strong finished steel prices, strong demand, and ample scrap but not excessive plus logistics issues for getting raw materials to mills. 


Some key metrics contributing to boosted sentiment include export prices that have risen by $44.40/mt in the past month for US HMS 1&2 (80:20) to Turkey, the Davis Index was at $502.50/mt cfr Turkey for the grade on Tuesday compared to $458.10/mt cfr on May 4.


Steel capacity utilization rate currently stands at 81.5pc with weekly output up to 1.84mn nt compared to 55pc capacity at this time last year when production dipped to 1.22mn nt. 


US HRC spot prices have reached new historical levels at $1,720-1,764/mt (1,560-1,600/nt) fob mill this week, up $45-58/mt against prices reported on May 19 but up $155-177/mt against prices around April 30.


Pig iron prices, currently at $665/mt cfr Nola represent a monthly rise of about $70/mt since April 30. The large premium of pig iron above prime grades such as #1 busheling may potentially narrow to $25-65/mt assuming a rise of $50/gt transpires in prime.

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