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

The US West Coast ferrous scrap dock prices climbed in Los Angeles and Portland but were rangebound in San Francisco due to rising export demand and tight scrap flows into yards. 


Los Angeles docks began to roll out official price increases of $10/gt last Tuesday but have raised effective deal prices as they compete for inventories, especially, for quiet deals to obtain larger demolition loads. 


The latest scrap import deals at $359/mt cfr Turkey are increasing expectations that US-sourced deals will be $60-65/mt higher than an early November transaction. US rebar importers are actively considering import loads as US domestic finished steel prices increase, which is further supporting production demand at Turkish mills. One market participant shared that Turkish export rebar prices are still conservative given the optimistic outlook into spring and that he is actively negotiating buys. 


Despite the concerns over the temporary surge in COVID-19 infections and the potential effect of lockdowns on the domestic and scrap importing economies, most participants believe prices will remain strong as Bangladesh, India, and other Asian net scrap importers continue planning production into Q1 2021 with limited domestic scrap. 


South Korean and Taiwan buyers are stating a preference for domestic scrap in the face of rising Japanese, US, and Russian scrap offers. With increased production expected in December and January, scrap import buys seem inevitable along with higher domestic prices.  The net effect of this trend on scrap prices in December is still unknown since a fall in iron ore prices would pull down scrap prices, though, the tight supply could support the market. Thailand, Malaysia, and India are encountering higher domestic scrap prices that can support higher import levels. Tightness in container availability along with higher production schedules later in Q1 2021 may increase bulk scrap deals.


The US domestic scrap market started trading on Tuesday and terms like “market is on fire” were used by some market participants. The latest expectation was for December scrap prices to increase by $30-60/gt depending on region and grade with #1busheling achieving the larger leaps against November settled prices. 


The weekly Davis Indexes in Portland climbed as US domestic mills begin to trade this week. The smaller steel-producing region is expected to increase prices on the lower end of the $30-60/gt price increase range and docks are having to compete for inventory. The index for #1 HMS increased by $31/gt to $265/gt and P&S 5ft rose by $29/gt to $278/gt. The index for shredder feed increased by $24/gt to $214/gt.  


The San Francisco Davis Indexes remained rangebound. HMS #1 and P&S 5ft were flat at $282/gt and $288/gt delivered, respectively, and shredder feed rose by $3/gt to $182/gt delivered. 


Los Angeles’ Davis Indexes increased by $18/gt for #1 HMS to $218/gt delivered, P&S 5ft rose by $20/gt to $230/gt delivered, and shredder feed went up by $17/gt to $169/gt delivered. 


The containerized market in Los Angeles has continued its upward trend this week. Market participants reported deals for #1 HMS at $300/mt fas from $280-290/mt fas last week, up $10-20/mt. Several sources reported hesitation in buyers at $300/mt fas on Tuesday. Some large sources of scrap are reported substantially off in scrap production by up to 50pc, which is affecting inventories for containers and docks and tightening availability. Increased processing production in Q1 is expected to begin easing the tight scrap flows into yards.

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