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

Early August indications pointed towards ferrous scrap price increases of $20-30/gt for prime grades with shredded and cuts gaining $10-20/gt in September over this month’s settlements. 


Momentum is picking up in the Midwest this week with the latest census viewing prime grades rising by $30/gt or more and secondary grades increasing by $20-30/gt and beyond. Shredded prices are about $50/gt higher in the East Coast at present and about $30/gt higher in the South compared to Midwest shredded. 


Eastern and Southern markets could see smaller price growth movements in September trading compared with the expected price moves for the Midwest. Although, a source noted a rumored deal for September in the south at over $30/gt on shredded scrap compared to early August prices.


Steel mill demand has reportedly shifted; and as it picks up, market participants believe demand for scrap is beginning to outpace supply in most regions. The market is also following export demand that has moved many scrap tons to the East Coast. Some exporters believe Turkish mills are still looking for cargoes for September shipment though activity has been quiet.


A few bulk exporters are struggling to match rising demand and report slower new scrap bookings as existing supply is needed to fulfill current orders. This trend could point to price escalations heading in September and October. In the short-term, buying in Turkey, Pakistan, and other Asian locations has slowed down over the past week as buyers adopted a wait and see approach on a potential price correction within August. Regardless, the export scrap committed for September will compete with domestic demand in the month.


Upcoming export activity is described as a wild card. Uncertainty could also arise when factoring in the potential weakening of the US dollar, which will influence exports thus extending to domestic prices as well. Some exporters see activity slowing on the coast following the minimum, $20/gt dock collections’ price gains over the past four weeks. 


Scrap flow into yards is reported at 65-75pc of historical levels for secondary grades. None of the regions forecast modest gains or downside prices for any material in September, whereas August had upward and downward price variations for different grades and locations.


Upward trends are expected in hot-rolled coil (HRC) prices as lead times increased to over five weeks in July compared to just under four weeks in June. Although HRC spot prices declined in the US by about $10/nt ($11/mt) in July to around $450/nt fob US mill, similar selling prices for HRC are seen in Europe and Asia. However, HRC prices at other locations have been on the rise compared to prior months, indicating upward global trends. 


Iron ore has been reaching record high price levels which have helped Chinese scrap buying prices to remain high for materials such as pig iron, and should pull prices up globally for certain grades, especially scrap substitutes. 

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