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

US containerized ferrous scrap prices trended down on the West Coast on Thursday following the trend on East Coast where prices fell for the second successive week. 


A few buyers began to place lower bids while others preferred to wait until next week. Sellers though noted transactions ranging from slightly lower to sideways depending on deal details. 


Spreads between HMS 1&2 (80:20), and P&S 5ft and shredded continue to remain wide at around $30-40/mt on the West Coast. Buyers from Taiwan, Vietnam, and South Korea, for example, are noting a rise in COVID-19 cases that is causing uncertainty at mills, which has the potential of a negative effect on finished steel demand if the cases spiral, with domestic scrap prices declining in those countries over the past week. 


Containerized ferrous buyers may achieve another downtrend of $5-10/gt next week but prices are likely to bottom out given the strength of the US domestic scrap market, tight global inventories for export, to-date domestic demand in each of the buying markets, and their need for imported material. 


US domestic scrap in June is anticipated to trend up by $50-70/gt on shredded scrap against May settled prices, which could see shredded prices exceeding $500/gt delivered. Depending on the starting point of May’s transactions, some market participants on the East Coast and in the Southeast noted the potential for shredded to trend at $510-520/gt delivered. 


Japanese scrap offers have softened in discussions. This week Tokyo Steel kept ferrous scrap purchase bids unchanged, but next week its activity could provide more market information. 


Domestic scrap prices, as well as import offers from other sources competing with the US, have softened in India. Buyers are relating weaker sales to domestic uncertainty, vagueness from China, and cash flow challenges at firms. Chinese and other metals markets are showing resiliency, though, late in the week and adding to an overall positive sentiment despite unknown factors. 


The weekly Davis Indexes in New York rose by $3/mt to $497/mt fas for #1 busheling but other indexes fell on softer bids. HMS 1&2 (80:20), P&S 5ft, and shredded dropped by $2/mt to $441/mt fas, $469/mt fas, and $461/mt fas, respectively. Machine turnings declined by $1 to $417/mt fas. 


The weekly Los Angeles containerized scrap indexes fell this week by $4-8/mt after rising by $14-19/mt in the prior week. The index for #1 busheling dropped by 4/mt to $454/mt fas, P&S 5ft by $5/mt to $443/mt, and shredded by $6/mt to $444/mt fas. HMS 1&2 (80:20) decreased by $8/mt to $409/mt fas. 


In San Francisco, the weekly indexes fell by $3/mt to $448/mt fas and $437/mt fas, for #1 busheling and P&S 5ft, respectively. HMS 1&2 (80:20) decreased by $8/mt to $402/mt fas while shredded dropped by $4/mt to $439/mt.

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