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

US West Coast dockside ferrous scrap prices were rangebound for the fourth successive week on Tuesday with an expectation that prices may hold at these levels next week as well. 


Los Angeles docks met with some resistance to lower prices as larger loads continued being purchased at prices above the index levels. Moreover, dock buyers continue to seek tonnage despite conveying the possibility of upcoming lower prices. Several large dealers conveyed that prices are likely to remain unchanged next week given tight global inventories and an anticipated increase in export demand in late September. 


US-based exporters continue believing that Asian markets will increase their buying interest as mills face fewer energy curtailments during autumn in their respective domestic markets, construction projects resume, vaccine adoption is expanded, and stimulus monies are further disbursed.


Domestic scrap prices in South Korea, Taiwan, and Vietnam declined this week given the soft domestic demand and a weakness in global scrap prices. 


Daily spot prices for 62pc FE iron ore have remained in the mid-$150/mt cfr North China levels. Chinese domestic demand is expected to support the Asian region’s exports in late 2021 into 2022 despite iron ore prices declining from above $220/mt highs. This expectation reflects the recent assurances by the Chinese government officials to maintain a growing, managed, and balanced-priced economy. The present pent-up demand as economies recover will continue fueling steel use and ferrous demand also. 


The seasonality and lockdown environment in various Asian countries has reduced demand for finished steel and, therefore, the input for ferrous inventories. The situation has also been exacerbated by supply chain issues, high finished steel prices limiting some steel processing buyers, and the chip shortage in the automotive industry. 


The weekly Davis Indexes in Portland continued flat with #1 HMS at $385/gt delivered, P&S 5ft at $405/gt delivered, and shredder feed at $290/mt delivered export yard. Domestic mills are trending at minus $20/gt against early August settled prices prior for the early September trading week. Several large Pacific Northwest mills have canceled the remaining August orders pointing towards a definite downtrend in ferrous prices in the upcoming week’s trades. 


San Francisco’s weekly Davis Indexes also continued unaffected with #1 HMS at $386/gt delivered, P&S 5ft at $400/gt delivered, and shredder feed at $288/gt delivered. 


In Los Angeles, the Davis Indexes were unchanged for #1 HMS at $335/gt delivered, P&S 5ft at $348/gt delivered, and shredder feed at $246/gt delivered export yard. 


Dock prices in the UK and EU slipped this week, but those on the US East Coast trended mostly sideways with a limited downtrend. Several market participants expect Turkish trades on HMS 1&2 (80:20) to decline to the $430/mt cfr Turkey range over the next few weeks but anticipate a rebound in November and December. The Davis Index for US-origin HMS 1&2 (80:20) fell by $2.09/mt to $447.76/mt cfr Turkey on Tuesday from $449.85/mt cfr on Aug 24. Bulk freights are also rising, which will continue placing pressure on ferrous margins and end pricing. 

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