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

The US West Coast docks remained rangebound on Tuesday after healthy price increases last week. 


Market participants have noted the tight global scrap supply and strong demand amid the latest Turkey import scrap deals at increasing prices, but they also point to the need to manage exposure. Several sellers mentioned that though scrap inflows are lower than needed and demand remains high, market conditions could easily shift by policies beyond anyone’s control due to the growing number of COVID-19 infections, which may result in lockdowns. 


Moreover, scrap dealers find it difficult to foresee which aspects of the supply chain would be affected now. Due to trade imbalances between Asia and the US, higher freight prices and even transport availability are adding to the variables that scrap sellers are trying to manage.


Japanese domestic scrap prices are rising with the latest announcements by Tokyo Steel. The recent Kanto Tetsugen bid increase that resulted in prices moving up by $21/mt against October auction prices, has also added support for export prices. 


Bangladeshi, Pakistani, and Indian buyers could continue buying imported scrap despite concerns on domestic sales of finished steel. In India, sponge iron offers are facing higher prices supported by strong iron ore prices, which, in turn, are translating to higher prices on ingots, billet, and rebar. As scrap sellers remain firm on offers on anticipated demand from buyers, some traders forecast that bulk prices to Pakistan and Bangladesh may increase by $20-30/mt by January. 


Taiwan, South Korea, Malaysia, and Thailand have opted for domestic scrap supplies but with increasing imported prices, domestic scrap prices are beginning to rise. Vietnamese mills are reportedly focused on bulk scrap purchases and will continue sourcing from the US at higher prices. 


The weekly Davis Indexes in Portland remained unchanged after last week’s rise with #1 HMS remaining at $234/gt, P&S 5ft flat at $249/gt, and shredder feed also unmoved at $188/gt.  


San Francisco’s weekly indexes also held at last week’s levels. The Davis indexes for #1 HMS are at $261/gt delivered, P&S 5ft at $266/gt delivered, and shredder feed at $174/gt delivered. 


The weekly Davis Indexes in Los Angeles increased last week as the docks sought to attract ferrous scrap. This week most market participants report continued flat pricing, but highlight that larger tonnages may attract higher prices in quiet deals. The Davis Indexes in Los Angeles increased by $1/gt across all grades with #1 HMS now at $197/gt delivered, P&S 5ft at $208/gt delivered, and shredder feed at $148/gt delivered. 


In Los Angeles, the containerized market continues to climb with #1 HMS prices increasing by $10/mt from $270-275/mt fas last week to $280-285/mt fas. P&S 5ft is being heard at $300/mt fas on the West Coast. 


Mexican mills are facing an unprecedented reduction in domestic scrap production in a period of increasing mill demand. While feedstock could increase on higher buying prices under normal circumstances, several dealers confirmed that peddler activity will remain subdued on pandemic concerns through H1 2021. Therefore, Mexican mills are expected to continue seeking ferrous scrap volumes throughout the West Coast, Southwest, and Southern US regions, which will compete with export to Asian markets and domestic mills.

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