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

US containerized ferrous scrap indexes increased on the East Coast and in San Francisco this week, while remaining relatively flat in Seattle and declining in Los Angeles. 


East Coast containerized deals were achieved at higher prices early in the week but began declining on Thursday. Buyers and sellers on both coasts are concerned that ferrous scrap prices have peaked for Turkish mills, which largely influence global scrap market sentiment. 


Demand for finished steel remains subdued in India and Bangladesh, as well as other countries, because there’s uncertainty about what potential lockdown formats could look like to counter the growth of new COVID-19 cases, which have coincided with economies reopening. Pakistan has announced a 20-day “smart lockdown,” which will influence scrap demand in the region covered.


Additionally, US domestic scrap prices for July are expected to trend sideways to soft-sideways, depending on region and grade. Shredded and prime scrap grades are expected to soften on oversupply and weak demand from mills, as the industry’s capacity utilization is anticipated to stay at 54-56pc for the next few weeks. According to the American Iron and Steel Institute, US capacity utilization was 54pc for the week ending June 13, 2020. As a result, containerized buyers are delaying purchases expecting prices to decline over the next two weeks. 


East Coast sellers reported strong sales at the end of last week continued into early this week, but that higher deal prices couldn’t be maintained as the week progressed. The weekly Davis indexes increased across all grades on the East Coast. 


The weekly Davis Index in New York for #1 busheling increased by $3/mt to $255/mt fas and increased for HMS 1&2 (80:20) by $9/mt to $234/mt fas. The index for machine shop turnings increased by $6/mt to $193/mt fas, while the Davis Index for P&S 5ft increased by $8/mt to $254/mt fas, and the index for shredded increased by $5/mt to $247/mt fas. 


Last week’s transactions indicated prices progressively improved on the West Coast. The trend continued into this week in Los Angeles, but declined by Wednesday. Similarly in Seattle, the market remained strong into the week and declined by Wednesday, as did other regions.  In the northern West Coast region, sellers observed a downward outlook beginning Friday, with buyers withdrawing inquiries. 


As Japanese ferrous scrap export prices softened and Taiwanese mills reduced their purchases, deals late this week have softened. Two Taiwanese mills have scheduled maintenance next week and will pause domestic purchases. For regional mills seeking scrap, domestic supply is the preferred alternative. As a result, interest from Taiwan is expected to decelerate over the next week. 


South Korean mills remain focused on purchasing domestic scrap because import prices have increased over the past month. Korean buyers have also opted for bulk purchases, with the most recent deal for #1HMS at $282/mt cfr Korea. 


In Los Angeles, the weekly Davis Indexes decreased by $3/mt to $245/mt fas for #1 busheling and by $6/mt to $241/mt fas for P&S 5ft. The index for HMS 1&2 (80:20) increased by $4/mt to $230/mt fas, while shredded decreased by $6/mt to $241/mt fas. Buyers focused on purchasing HMS 1&2 (80:20), as interest in the higher grades declined.

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