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

The US containerized scrap prices and the corresponding Davis Indexes fell by $28-43/mt on core grades signifying a steeper drop from the $1-10/mt declines last week, which halted a 14-week price surge.


Turkey’s lower import scrap bulk prices have reverberated into all aspects of scrap trading. This week buyers have paused on deals and those that are feasible are low-volume ones, according to sellers. 


Several sellers also noted that they are not aggressively quoting or matching bids as prices in February may rebound after the second half of this month absorbs the expected market corrections. Even with the market in retreat mode, some suppliers’ order books are full until mid-February because of which this short-term contraction is not an immediate concern to them. Others expect an upward trend from Chinese and Asian steel markets after the Lunar holiday which begins on Feb 12 and officially ends on Feb 22.


Offer prices on scrap from Japan have declined along with the appetite from Asian buyers. Asian market participants note that the correction to prices, which climbed too fast since early December, was required as finished steel demand is still recuperating from the pandemic, stimulus packages are taking shape, and overall economic conditions in Asian markets are still being assessed. 


The signals in China upon its return from the Lunar holiday will be essential to inform the market of its import demand on ferrous scrap, billet, and finished steel. Overall, iron ore and scrap prices are expected to remain strong through 2021. 


The US domestic scrap market was expected to trade lower by $10-20/gt in February against January settled prices. However, given the softness in export and uncertainty along with extremely high prices on finished steel goods buyers may push for discounts because of which sellers are projecting a further drop to $20-30/gt down. 


The weekly Davis Indexes in New York fell by $36/mt to $423/mt fas for #1 busheling. HMS 1&2 (80:20) declined by $33/mt to $389/mt fas, P&S 5ft decreased by $28/mt to $413/mt fas and shredded moved down by $38/mt to $411/mt fas this week. Machine shop turnings decreased only by $3/mt to $347/mt fas. Market participants continue observing a decreased interest for P&S 5ft compared to shredded. 


In Los Angeles, the weekly Davis Indexes accelerated the decline this week after a modest tick down last week. The weekly index for #1 busheling fell by $37/mt to $410/mt while HMS 1&2 (80:20) declined by $34/mt to $375/mt fas, P&S 5ft dropped by $38/mt to $397/mt fas, and shredded corrected down by $39/mt to $397/mt fas. 


The deals declined more severely in the past two days as low volume transactions were heard as low as $360-380/mt fas. Higher volume dealers diverted their strategy. Some reported higher selling prices than the average while others felt that their inventories were too high given the uncertainty over the next few months and preferred to offer buyers attractive discounts. 


In San Francisco, the indexes declined by $36/mt to $410/mt fas for #1 busheling and HMS 1&2 (80:20) decreased by $33/mt to $375/mt fas. P&S 5ft and shredded both slipped down by $43/mt to $393/mt fas.


The Davis Indexes in Seattle also tumbled with #1 busheling falling by $39/mt to $415/mt, HMS 1&2 (80:20) declining by $40/mt to $378/mt fas, P&S 5ft dropping by $39/mt to $395/mt fas and shredded decreasing by $41/mt to $395/mt fas.


The daily Davis Index for Turkish imports of US-origin HMS 1&2 (80:20) declined by $38.75/mt to $440/mt cfr on Thursday compared to $478.75/mt cfr on January 14. Turkish mills are seeking bulk scrap but sellers are maintaining strong offer levels. An uptick of $0.12/mt was calculated today, but it is unknown where the standoff will end as the month continues.

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