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

US West Coast dockside ferrous scrap prices were rangebound on Tuesday despite pressure from buyers to reduce prices. Still, several participants in the Los Angeles region speculated a price change by Aug 1.


The Davis Index for US-origin HMS 1&2 (80:20) fell by $5.50/mt to $479.38/mt cfr Turkey on Tuesday from $484.89/mt cfr on Jul 20.


Japanese ferrous scrap exporters are also receiving competitive bidding prices with a downward trend as Vietnamese, Korean, and Taiwanese buyers limit buys on market uncertainty and a preference for domestic ferrous scrap. The move toward deals at lower bid levels over the course of the next few weeks could place downward pressure on export prices from the US and, therefore, dock buying prices. However, Japanese domestic mills have retained ferrous scrap buys at unchanged levels from the prior week. 


Pakistani, Bangladeshi, and Indian mills are limiting their interest. Still, ferrous import scrap prices may gain support as Indian mills increase domestic steel activity. Pakistan and Bangladesh are also expected to return as market uncertainty clears up after lockdowns, domestic activity resumes, and the economic activity outlook is clearer pending Chinese duty tax changes if any. 


The US domestic scrap market is anticipated to have a soft to sideways trend in August that could see some grades losing $20-30/gt against July settled prices. However, some scrap yards continue reporting slow flows amid high demand and potential negative effects of logistics on mills that opt to cancel July ferrous buys in hopes of capturing lower prices in August. Among secondary grades, #1 HMS is likely to be most affected by lower price pressure due to sufficient inventories. 


Some mills buyers believe that #1HMS may be in surplus in some regions and are anticipated to place pricing pressure on the grade.


The weekly Davis Indexes in Portland for export yard scrap were unchanged for #1 HMS at $392/gt delivered, P&S 5ft at $413/gt and shredder feed at $295/gt delivered export yard.


The San Francisco weekly Davis Indexes trended flat this week though market participants note downward pressure from buying docks. Lower prices could be announced next week but on Tuesday, #1 HMS remained unchanged at $394/gt delivered, P&S 5ft held unchanged at $405/gt delivered, and shredder feed was flat $291/gt delivered. 


In Los Angeles, the Davis Index continued in range with a slight downtrend as #1 HMS was flat at $353/gt delivered while P&S 5ft fell by $1/gt to $362/gt delivered, and shredder feed dropped by $2/gt to $266/gt delivered. Some market participants speculate a price cut on Friday or by Monday as August begins. 


Los Angeles container prices were reported at $400-420/mt fas last week but are trending down by $10-20/mt to $390-400/mt fas today. Freight charges are increasing on ocean rates along with buyer hesitation on COVID-19 domestic market economic concerns, thereby, placing pressure on ferrous container prices.

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