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

US containerized ferrous scrap indices decreased on the East Coast for the second consecutive week. On the West Coast, scrap deals, which began softening towards the end of last week, declined further by Thursday.


The weekly Davis Indexes in New York decreased across most grades with HMS1&2 (80:20) falling by $6/mt fas to $260/mt fas, P&S 5ft decreasing by $10/mt to $277/mt fas, and shredded slipping by $9/mt to $276/mt fas. The index for machine shop turnings encountered a sharper correction of $15/mt to $233/mt fas. However, #1 busheling increased by $1/mt to $290/mt fas.


Shredded scrap containers continue to be quoted at $275-290/mt fas with the majority at $280/mt fas. The higher quoting sellers believe that the present downturn is temporary and that prices will rebound once there is more clarity in the scrap markets in the next two weeks. Asian buyers are tentative on accepting higher priced offers given the potential for domestic scrap being sourced at lower prices in the short-term in those countries.  


The Los Angeles Davis Indexes for containerized scrap dropped with #1 busheling and P&S 5 ft declining by $9/mt to $283/mt fas and $280/mt fas, respectively. The index for HMS 1&2 (80:20) decreased by $6/mt to $263/mt fas, while shredded slipped by $5/mt to $284/mt fas. Deals began to soften since last week with market participants reporting transactions at $265-268/mt fas then, which have now translated to $260-265/mt fas for most sellers.


Sellers continue reporting limited scrap inventories with the possibility of this lull being another pause in the market before heading into Q4 2020. Many Asian mills remained on the sidelines in the past month as prices surged and are expected to return to containerized buying activity in October and November. 


The new Indonesian import requirements that are effective October 1 have also slowed down deals to the destination. Sellers report that many companies they previously sold to are still trying to finalize their registrations with the expectation that most of the pending paperwork or ambiguities will be resolved by mid-October. 


The latest deal by a Turkish mill at $299/mt cfr on average for 12,000mt of HMS 1&2 (80:20), 10,000mt shredded, and 1,000mt each of bonus and busheling has affirmed that US-sourced scrap will likely maintain the $300/mt cfr-level on HMS 1&2 (80:20). Returning buying activity from Turkish mills will increase competition in the US domestic scrap market as well as the docks for relevant regions, thereby, supporting container prices as buying activity resumes after the temporary pause. 


Asian countries also delayed ferrous scrap buys on lower finished steel prices which may affect their recent import activity as well as potential dumping in the region from China. 


Taiwanese and South Korean buyers are cautiously assessing their domestic and export markets for Chinese influence along with tracking a relatively stable, but risky finished steel environment. South Korean buyers actively placed lower bids for Japanese sourced scrap. On the other hand, while Japan has actively adjusted export pricing to match bids, it may begin firming up as Japanese companies increase buying volumes in October. 


Pakistani, Indian, and Bangladeshi buyers continue their delayed ferrous scrap purchases due to weak domestic steel demand, lower billet prices, and softer domestic scrap prices. 


The Davis Indexes in San Francisco decreased across all grades, falling by $12/mt to $273/mt fas for #1 busheling, by $6/mt to $278/mt fas for shredded, and by $11/mt to $253/mt fas, and $273/mt fas for HMS 1&2 (80:20) and P&S 5ft, respectively.

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