Davis Index’s monthly UK 1&2, 3B and OA ferrous scrap consumer indices climbed by £60/mt ($81mt), to £280/mt, £290/mt, and £295/mt, respectively, delivered mill following the conclusion of mill-yard negotiations in January.
Monthly UK ferrous scrap settlements were staggered over the past month, as some large domestic suppliers agreed to “manage” price hikes with local steel mills.
Davis Index understands that increases of £30/mt were initially passed on to domestic steel producers to limit merchant suppliers’ expectations in dockside negotiations.
This had the desired effect for most bulk processors and exporters by suppressing increases of ferrous scrap purchase prices at UK docksides by a similar amount.
More recently, merchant suppliers became aware of the fact that some exporters had maintained relatively low dockside rates, enabling them to benefit from relatively wide margins.
As a result, some merchant suppliers threatened to hold back material last week unless those bulk processors passed on a portion of healthier margins.
Based on the increase in last week’s UK ferrous scrap dockside settlements, domestic suppliers negotiated a further £30/mt increase to a total of £60/mt for January mill deliveries.
Davis’ monthly UK 4A/4C, 8A/8B, and 12A/C ferrous scrap consumer indices also increased by £60/mt to £303-308/mt, depending on grade, over the same period.
(£1 = $1.35)