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

September ferrous scrap trading completed final business in the US on Wednesday with market participants expecting a further softening of prices in October trading, mostly for prime grades. 


Mill buyers covered September scrap purchasing needs with no difficulties leading sellers to believe a price rebound is unlikely over the next month. Market direction currently points to continued weakness on scrap oversupply although price upticks are still feasible during late Q4. 


Several dealers cite that secondary grades have likely reached a bottom for now although prime grades still hold some room for a small amount of downside. October trading may transact at unchanged values if not at soft sideways, with some downward potential on primes. Yet, the opinion is varied, and several market participants did express hopes of a potential uptick at least by late October, given the spread between domestic and export, if demand continues in the latter. 


Larger volumes of scrap will be needed by mills following maintenance outages while inclement weather will arrive towards the year end tapering excess scrap flows and strengthening demand. Sellers have been heard grumbling more as well, considering domestic price decay has been gradually increasing since August. Some may stand firmer in refusing any further, large declines as steel sales maintain solid price levels.


Chicago markets settled with the monthly Davis Index for prime grade #1 busheling falling by $50/gt to $583/gt delivered mill. Secondary grades, #1 HMS fell by $30/gt to $423/gt delivered, P&S dropped by $20/gt to $470/gt delivered, and shredded moved down by $10/gt to $470/gt delivered Chicago consumer.


Sellers in or near Chicago originally resisted downward pressure for shredded as it was the sole highly sought grade from a couple of area mills. Shredded sold sideways to down $15/gt early in the trade, then ended Tuesday with additional tonnage moving down by $10/gt.


Other grades in Chicago, such as #1 HMS were oversupplied making the few buyers of the material easily attain down $30/gt while P&S 5ft, which was in higher demand, did not attain the full $25/gt down, essentially selling at $20/gt decreases against August settlements.


Ohio Valley followed the prevalent trend of down $50/gt for primes and down $25/gt for secondary grades with the index for #1 busheling settling at $617/gt delivered, #1 HMS at $425/gt delivered mill, P&S 5ft at $440/gt delivered and shredded at $462/gt delivered Cleveland/Youngstown consumer.


Southeast and South, predominantly trended at a decline of $40/gt on primes and down $20/gt on secondary grades with a few pockets decreasing primes by an additional $10/gt against August settled prices.


In the Carolinas, the Davis Index for #1 busheling declined by $49/gt to $559/gt delivered, #1 HMS decreased by $20/gt to $409/gt delivered, and P&S 5ft fell by $23/gt to $424/gt delivered. Shredded and machine turnings both dropped by $21/gt to $432/gt and $340/gt delivered, respectively. 


The Alabama Davis Index for #1 busheling fell by $39/gt to $597/gt delivered. #1 HMS and P&S 5ft both decreased by $19/gt to $428/gt delivered and $445/gt delivered, respectively. P&S 3ft decreased by $17/gt to $464/gt delivered as shredded fell by $20/gt to $464/gt delivered. Machine shop turnings declined the most in the region with an erosion of $22/gt to $353/gt delivered. 


HRC transactions are averaging about $2,129/mt ($1,932/nt) as of Sep 8 with some exceeding the $2,138/mt price point. With the latest declines in scrap, finished steel prices have not contracted but price increases have slowed down. The prices increased by about $154/mt ($140/nt) within June,  $132/mt ($120/nt) through July, and $66/mt ($60/nt) through August into early September. Automotive shutdowns due to chip shortages may affect pricing as mills run at lower utilization rates. 

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