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

Domestic ferrous scrap trading for November concluded for the most part by Friday with some transactions lingering into Monday. 

 

Markets by and large transacted at unchanged prices from October settled prices, however, prices increased in some regions with limited material and strong mill demand. On the other hand, mills in areas such as Chicago and Cleveland were lagging on buy volumes as well as trending at lower price levels than Southeastern regions. 

 

Unchanged prices were agreeable for many sellers who still owe tons on October orders, but sideways prices were not enough to move all tonnage requirements for mills. Thus, prices ticked up gradually especially for P&S 5ft and #1 Busheling in or near the Chicago area. According to a dealer, a mill in the area had not purchased for several months and now purchased about 70,000gt, thereby, supporting higher prices in Monday’s deals.

 

US mill utilization rates are increasing, currently at 71.1pc according to the American Iron and Steel Institute, while order books and lead times are increasing. HRC prices continue rising and are presently at $640-$700/nt, ($705-$772/mt) fob mill with lead times at eight weeks, although buyers are heard pushing back on the higher prices. CRC prices are heard in the range of $840-$880/nt ($926-$970/mt or) fob mill. This growth is expected to continue as markets already predict firm prices for domestic finishes steel and competing import options through the end of the year with strong capacity utilization into January. 

 

In Cleveland, prime grades such as #1 bundles and #1 busheling increased by $20/gt  while cut grades such as HMS 1&2 (80:20) remained sideways and shredded climbed by $10/gt delivered. The Davis Index for #1 busheling increased by $20/gt to $326/gt delivered while the index for HMS 1&2 (80:20) rose by $1/gt to $250/gt delivered. 

 

In Chicago, the demand for secondary grades was healthy and about 40-50pc of tonnage was sold at flat prices while the remainder of P&S 5ft and #1 busheling sold at up $10-20/gt. Prime grade, busheling settled at $304/gt delivered while P&S 5ft settled at $284/gt delivered. Surrounding regions moved P&S 5ft into Chicago due to high demand and limited supply in the area’s mills. 

 

Pittsburgh, Detroit, Cincinnati, Philadelphia, and Buffalo markets settled more quickly late last week, at prices that were sideways or ticked up or down across different grades. Prime grades rose by about $10/gt in Pittsburgh, where the index for #1 busheling climbed by $13/gt to $292/gt delivered while the index for HMS 1&2 (80:20) continued unchanged at $245/gt delivered. In Detroit, the Davis Index for #1 busheling increased by $5/gt to $289/gt delivered while HMS 1&2 (80:20) and P&S 5ft were flat at $244/gt and $256/gt, respectively. 

 

The Texas and Southeastern regions trended mostly sideways with a few increases on #1 busheling as the Arkansas market increased by $5/gt to $323/gt delivered and the Houston index on the grade increased by $2/gt to $320/gt delivered. Houston’s and Arkansas’ HMS 1&2 (80:20) and P&S 5ft indexes continued unchanged at $287/gt and $290/gt, respectively. In Birmingham, the P&S 5ft index increased by $2/gt to $298/gt delivered as HMS 1&2 (80:20) trended flat at $276/gt delivered.

 

Opinions for December ferrous trade range from sideways to up $30/gt against November settled prices. Market participants warn that the discrepancy in expectations is due to fewer working days next month, uncertainty regarding mill demand, and the influence of year-end inventory restrictions. 

 

Demand could stay unchanged from November, resulting in higher prices in December on tight feedstock supply, due to fewer receipt and processing days and lighter feedstock in winter. Some market participants, though, believe that demand volumes may be lower given the adequate buy in November and end of year inventory management transferring most of the uptick expected in the next 60 days to the January trading week. Others believe mill demands will be sufficient for an increase of $10/gt on HMS 1&2 (80:20), which trended flat across most regions in November trading.

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