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

The July domestic ferrous scrap trade formally commenced in the US on Tuesday afternoon after a couple of major Detroit area mills announced price drops of $40/gt for prime grades and $20/gt declines on shredded and cut grades over June settlements. 


Early June forecasts predicted a sideways to soft sideways market for July, however sentiment continued to fade throughout the month as plenty of material from June was left without a home. Volumes in July, including TBDs (to be determined), have been offered to consumers since early last week as sellers believe scrap availability exceeds mill demand.


Mills have reported they are operating at about 55pc capacity on average, as compared to the typical, more productive levels closer to 80pc. Some of the major mills report being heavily stocked and continue with reduced buying programs, for now.


Moreover, mills that are characteristically heavy prime consumers have fallen behind as prime flows have improved amid an incremental recovery in the automotive industry. The historically large gap between primes and obsolete grades could now narrow, to around $50/gt, improved from record high levels that were around $70/gt in June, although still above the average standard of $30/gt.


Surrounding Midwest markets as well as coastal or Southern markets, are quietly trading or anticipated to exchange shortly, following similar downward price trends seen in the Detroit or Chicago area. Many market participants said they would rather sell at price decreases of no more than $30/gt for prime and would prefer to sell at unchanged prices for other grades compared to June. However, further mill offers heard on Tuesday are a bit weaker.


Export activity has been slow as prices have been trending downward globally amid scrap oversupply and high mill inventories. East coast docks have picked up some of the domestic scrap surplus from Pittsburgh or Cleveland markets, further weakening dock collection prices.

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