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

The monthly Davis Index for UK 1&2 ferrous scrap plummeted by £57/mt to £113/mt delivered mill and fell by £60/mt ($74/mt) to £123/mt delivered for 3B, following the conclusion of mill-yard negotiations in April.


Major UK smelters were heard to have entered negotiations with bids of up to £80/mt lower than March settlements. However, it quickly became apparent that the urgency to secure enough melting volumes prompted buyers to settle negotiations swiftly.


Most British steel mills matched the relative decline of £50-60/mt in UK HMS 1&2 ferrous scrap dockside prices over the past four weeks, given the demand vacuum caused by mill closures in key export markets.


However, market participants estimate that up to 90pc of domestic (UK) merchant ferrous scrap collectors and suppliers have temporarily ceased trading in conjunction with nationwide “stay-at-home notices” for non-essential workers.


Furthermore, major UK ferrous scrap processors still operating under “essential” worker status have witnessed a dramatic decline in volumes across the weighbridge in addition to more stringent manual and physical handling criteria and social distancing measures. 


Reduced output or temporary closures at UK-based manufacturing plants has exacerbated this situation by drastically reducing the generation of relatively high grade new ferrous scrap volumes from this industry.


According to a market participant, it would be more beneficial to accumulate and stockpile premium ferrous scrap grades, such as OA (Plate & Structural/Girder) at present, than liquidate volumes at currently unattractive or unprofitable prices.


The monthly Davis Index for UK OA, 4A/4C, and 8A/8B ferrous scrap delivered consumer fell by £30/mt, £31/mt, and £29/mt to £160/mt, £158-163/mt, and £150-155/mt, respectively, over the same period, in response to the limited supply availability of premium grades.

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