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

US containerized ferrous scrap indices began to increase for some grades, after recent weekly declines, as Pakistani and Indian buyers increased inquiries on improved finished steel sales expectations. Taiwan and South Korea also resumed negotiations after returning from a week-long national holiday. Buyers who have been on the sidelines for the past month could also support the upward pricing movement in containers. 


US domestic scrap traded mostly sideways in October with some deals that achieved premium pricing in September declining. Additionally, those that did not place scrap inventories at the offer price were left with material even after returning to accept lower prices as mill buying books closed. 


The expectation over the past two weeks has been predominantly of a soft US domestic November market. However, with the recent export uptick and early mill activity to secure volumes, the sentiment of some scrap dealers is changing to a sideways to firm market next month. Due to the slow economic activity, including less cars on roads as well as fewer demolition projects, scrap sellers on both coasts have limited inventories if demand increases from both domestic mills and foreign mills. 


The weekly Davis Indexes in New York moved up or down depending on grade. The index for #1 busheling increased by $1/mt fas to $285/mt fas, while P&S 5ft rose by $2/mt to $276/mt fas and shredded moved up by $4/mt to $279/mt fas. On the other hand, HMS1&2 (80:20) decreased by $3/mt to $253/mt fas and turnings declined by $11/mt to $224/mt fas. Buying sources pointed to a good opportunity to purchase turnings at lower prices during the week prior to the positive trends over the past two days. 


Sellers who preferred to maintain inventories on the expectation of rebound last week, limited discounts on higher grades and could capture the gain from buyers such as India. 


The Los Angeles Davis Indexes for containerized scrap rose across all grades except #1 busheling, with HMS 1&2 (80:20) increasing by $7/mt to $255/mt fas and P&S 5 ft and shredded both rising by $2/mt to $274/mt fas and $275/mt fas, respectively. The index for busheling declined by $6/mt to $269/mt fas on decreased buying interest resulting in oversupply and active discount offers by some sellers. 


Tight scrap inventories, a sideways outlook surfacing for US domestic scrap, and active export inquiries are expected to support containerized prices through the end of the month. However, a few buyers warned that fluctuation in iron ore prices may influence the acceptable level of price increases in the market. 


The upward strength hoped for from Japanese export scrap prices has not fully materialized though inquiries from countries such as Taiwan and South Korea increased this week. Japanese export volumes, an alternative to US-sourced scrap have been discounted through the week.  Although, market participants expect Japanese ferrous scrap prices to rise amid global cues. This includes expectations of a rebound of domestic scrap prices that have been favored in respective mill markets, and increased Chinese buying activity of both imported ferrous scrap and finished steel that should support Asian markets.


The Davis Indexes in San Francisco mostly increased with HMS 1&2 (80:20) and P&S5ft rising by $9/mt and $3/mt to $244/mt fas and $263/mt fas, respectively. The index for #1 busheling decreased by $1/mt to $266/mt fas and shredded trended flat at $265/mt fas. 


In Seattle, the container indexes fluctuated given deals at initial expectations of a softer Asian market, which has now turned around. The Indexes are therefore expected to firm up once dealers return to the market next week. The index for #1 busheling and P&S 5ft decreased by $4/mt to $266/mt fas and $265/mt fas, respectively. HMS 1&2 (80:20) increased slightly by $2/mt fas on the latest activity including bids. The shredded index declined by $2/mt $268/mt fas.

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