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

US domestic ferrous scrap trade for March kicked off on Wednesday with three Detroit area mills announcing price increases of $10/gt on prime grades. The mills kept prices for shredded and other secondary materials unchanged. Two more local Detroit mills followed soon after. On Tuesday, sideways offers from mills were heard across the board setting the stage for trading. 


Some sellers reported earlier they would sell only at $20/gt increases while consumers were more willing to pay at a sideways price, prompting a temporary standoff. Shredders are likely to suffer this month if shredded prices remain at February levels. Most have paid higher prices these past few weeks to secure shredder feed material, so selling at February’s prices will hurt margins.


By Wednesday afternoon, several Detroit mills reported filling their requirements at the prices announced earlier in the day. Some sellers also confirmed those numbers, but several others are waiting until Thursday before they confirm any deals as they see strength in the market and mills have not completed tonnage requirements. 


Some suppliers are concerned about flat prices and have communicated that it is not the right number for obsolete grades considering tight supply in secondary materials and that February orders are not completed yet in some instances.


There were a few confirmed deals in Ohio, but trade was relatively quiet in Cleveland. The Pittsburgh area market is following Detroit but is still unsettled. A few transactions occurred in Philadelphia, but Chicago along with several other Midwest regions had not confirmed transactions at the time of publication. 


The Central and Southeast US waited for cues from the Midwest and expects to begin settling by Thursday. 


Pig iron imports to the US were at $363/mt cfr Nola on Wednesday up $16/mt from $347/mt cfr a week ago.


The sentiment was a bit more bullish on Monday as the market expected larger increases for all grades, with the highest upside potential in Ohio Valley due to several healthy mill buying programs in the region – Detroit mills have reduced buying requirements.


The $40/nt price increases announced last week by US Steel and Nucor for flat-rolled steel improved March sentiment and market participants expected to see scrap prices strengthen by $10-20/gt to support increasing finished steel prices.


The market also derived strength from increased mill demand, lowered dealer yard inventory, low mill inventory, improved mill lead-times at five to six weeks and February export activity.


Turkish export activity slowed down early in the week, postponing the expected trade commencement back by one day and putting a halt to two weeks of price increase momentum.


East Coast export yards lowered collection prices by as much as $20-30/gt on Tuesday, essentially taking back the gains received in February.


Several Southeast market participants expect collection prices to adjust only after prices settle.


Some market participants also see Covid-19 as a factor driving sentiment down as some companies are restricting business travel for their employees and note the impact it has on the economy, stock market, and overall business outlook.

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