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

US containerized scrap prices continued the upsurge that began in October into mid-December. A strong export market supported by the hefty increases of over $50-100/gt on US domestic scrap prices is supporting the containers market. 


The weekly Davis Index for basic pig iron (BPI) increased by $21/mt compared to a week ago and the Davis Index Turkey import scrap level is now close to $400/mt cfr on HMS 1&2 (80:20), up $39/mt against last Thursday. Higher export prices reflect freight increases, rising demand, and higher iron ore prices that are supporting the containers market’s surge, along with rising trends in scrap alternatives such as imported pig iron, domestic HBI, and DRI.


Japanese scrap export prices continue increasing to record levels. Export prices in Russian, Baltic, Latin American, and other scrap alternatives are also increasing, supporting US export prices amid limited scrap availability and offers on both the East and West Coasts. The limited supply has also prompted some traders to make offers at levels beyond “market expectations.” For example, on the East Coast, shredded offers by traders were reported at $380-390/mt fas on containers on Thursday. Negotiations are ongoing and concrete deals have not been heard. 


Buyers in India have accepted higher import scrap prices to meet production schedules and limited global scrap though domestic scrap prices have trended flat to down depending on the region. This may give mills an opportunity to shift attention to domestic scrap levels as they face elevated prices in the imported market. Offers were scarce to Bangladesh and Pakistan with buyers accepting higher import scrap prices.


Taiwanese buyers are cautiously purchasing while buyers in Indonesia and Malaysia have adopted a wait and see approach on climbing import offers. Vietnam finishes steel prices have not increased in tandem with higher scrap prices, thereby, limiting purchasing levels for buyers despite the continued demand. Mills have slowed their buys amid higher prices and questions on economic recovery on COVID-19 risks despite the cautious optimism for Q1 and Q2 2021. 


Freights may settle down on the West Coast according to a Taiwan trader, though at around $10/mt higher than the historical levels. 


The weekly Davis Indexes in New York rose by $23/mt to $386/mt fas for #1 busheling and by $13/mt to $340/mt fas for HMS 1&2 (80:20). P&S 5ft and shredded scrap climbed significantly by $33/mt to $373/mt fas, and $374/mt fas, respectively. Machine shop turnings were flat the previous week and have been lagging in weekly increases against the better grades as buyers focus on maximizing loads in a tight container market. The index for machine shop turnings increased by $8/mt to $271/mt fas.


The Davis Indexes in Los Angeles jumped for #1 busheling and shredded by $20/mt to $342/mt fas and $341/mt, respectively. HMS 1&2 (80:20) rose by $10/mt to $309/mt fas and P&S 5ft increased by $18/mt to $338/mt fas. 


The HMS 1&2 (80:20) index in Los Angeles has climbed by $61/mt from $248/mt fas in early October. Market participants stated that though container availability is tight sellers continue to make offers in hopes of obtaining a valid container booking. Overall, both sellers and buyers believe that the situation has not reached extreme levels. 


Some scrap sellers are also withdrawing themselves actively from the market to manage financial profits and the corresponding taxation as the end of year approaches and are retaining limited inventories in anticipation of a continued boost in prices next month. The spread between container and dock prices is still great at this time and sellers may not increase volumes towards docks due to tight container availability. A market participant noted that some scrap sellers may consider shifting volumes to docks if containers became more difficult to procure in the coming weeks. 


In San Francisco, the index for both #1busheling and P&S 5ft increased by $12/mt to $330/mt fas. HMS 1&2 (80:20) rose by $6/mt fas and shredded climbed by $10/mt to $330/mt fas, respectively. The better grades have been trending in tandem as buyers pursue them for their scrap import needs. 


The Davis Indexes in Seattle for #1 busheling increased by $12/mt to $330/mt fas as HMS 1&2 (80:20) rose by $8/mt to $308/mt fas. P&S 5ft and shredded both rose by $14/mt reaching $329/mt fas as buyers purchased both at about equal prices.

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