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

US ferrous scrap dealers expect a $20-30/gt ($20-30/mt) increase against December settled prices during the early January trading week. Scrap dealers are seeing a price momentum for the third straight month moving into January on domestic and global trends. 


The market encountered increases of $30-50/gt ($30-51/mt) in December (depending on region and grade). December also marked the second consecutive scrap price increase after a prolonged downward period during which August had the only gains of $20/gt ($20/mt). 


Domestic mills announced a series of price increases on flat finished steel products in the last two months. Base price increases on HRC and related flat lines began on October 24, while plate price increases lagged until Nov 8. Mills were reportedly incapable of fully collecting on those increases, as buyers pointed to fundamentals on weak end-use demand.


Domestic mills continued raising prices in December with Nucor increasing flat steel prices to approximately $110/nt through the three price increase announcements year-to-date and California Steel Industries (CSI) announcing base prices on new orders of flat steel up by $70/nt ($77/mt). Prices on HRC have risen 21-23pc to $555-565/nt ($612-623/mt) since late October.


It’s rumored that mining giant Vale may put CSI for sale as it seeks cost reductions and focuses on its raw materials segments. Some market players speculate CSI could be purchased by a dominant domestic mill, which could further synchronize price management levels nationally.


Plate producers have announced three price increases worth $120-130/nt ($132-143/mt) since early November. SSAB increased plate prices for a third time by a minimum of $50/nt ($55/mt). The previous increase was announced November 22 for $40/nt($44/mt). Nucor Plate Mill Group increased prices on all new orders for carbon, alloy, and heat-treated plate by a minimum of $50/nt ($55/mt). The base price is estimated at $700/nt ($771/mt), while the ex-works prices are about $675-690/nt ($744-760/mt) FOB mill. 


The longs market has been hesitant to announce price increases. Nucor announced on Friday that it is increasing wire rod prices by $40/nt ($44/nt). Prices in the rebar market remain stagnant against weak demand. Market participants reacted cautiously to the price increase announcement.


Ferrous scrap dealers reported slightly longer lead times, seasonal supply constraints, and firm demand for scrap. Beginning in 2020, when mills replenish scrap inventories, prices will increase $20-30/gt ($20-30/mt). Davis Index has been informed of completed contracts in the Midwest on an increase of $20/gt ($20/mt) in January. Several sources pointed to an unlikely $30-50/gt ($30-51/mt) repeat in January, as US finished steel prices are still seeking to rebound as the recent mill price increases take effect and the market gets a better picture of the demand outlook for steel products in Q1 2020.

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