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

The January ferrous scrap trade finalized a good portion of activity late last week with residual deals continuing to settle throughout this week. In the Southeast, some sellers in Texas and the Carolinas did not finalize placements until Tuesday. Price levels ended as expected with most grades from the Midwest to the East rising by $90-100/gt compared to December settled prices. 


Although some secondary grades such as machine shop turnings and P&S 5ft did not fare as well and moved up by $60-75/gt only in certain regions, based on starting price points when the month began. Towards the end of the trade, cut grades that started out at $90/gt above last month, traded at lowered values. However, prime grades generally moved at up $100/gt then made further gains of $10-30/gt in late-trade deals.


Some mills near the East Coast raised prices by $75/gt on cuts and filled requirements without difficulty. Prices in Arkansas rose by $100-120/gt while other Southern regions increased prices by $100/gt on prime grades and $60-70/gt on secondary grades.


In Chicago, #1 busheling sold for $470-500/gt with the Davis Index settling at $484/gt delivered Chicago mill for the grade, while the index for #1 HMS ended at $425/gt delivered with the selling price ranging between $405-430/gt. P&S 5ft concluded trade at $468/gt delivered with the full price range encompassing $450-490/gt. Shredded settled at $463/gt delivered Chicago mill, though late deals were under $460/gt.

Ohio Valley region, one of the strongest markets, mostly traded prime grades at up $100-120/gt with some deals increasing by as much as $130/gt above December levels. The monthly Davis Index for #1 busheling settled at $524/gt delivered Ohio mill.


Meanwhile some cut grades such as shredded sold at increases of $90/gt in early trade after which, prices were lowered by-the-day from Chicago to Ohio Valley locations. Thus, the Davis Index for shredded settled at $465/gt delivered Ohio mill. 


The lower trend was consistent in the Southeast where buyers who purchased at up $60-65/gt have now updated any further deals by $10/gt against recently settled prices. The trend is pointing to the potential for a softer market in the February ferrous scrap trading week. Expectations range from sideways to down $10-20/gt across most grades. Shredded is noted in excess supply by market participants.


The Philadelphia market gained some traction this month following small buy programs and lesser increases during December. Prime grades increased by $120/gt with the index for #1 busheling settling at $450/gt delivered. The Davis Index for shredded increased by $105/gt to $456/gt delivered Philadelphia mill. P&S 5ft settled at $426/gt delivered, increasing by $113/gt since Philadelphia mills bought the material in December.


In Texas, the monthly Davis Index increased by $103/gt to $502/gt delivered, #1 HMS climbed by $62/gt to $430/gt delivered, P&S 5ft firmed up by $68/gt to $448/gt delivered and shredded increased by $67/gt to $457/gt delivered. 


The Davis Indexes in Alabama rose by $104/gt to $497/gt delivered for #1 busheling, by $59/gt to $412/gt delivered for #1 HMS, by $59/gt to $432/gt delivered for P&S 5ft, and by $59/gt to $445/gt delivered for shredded. The P&S 3ft index in the region rose by $57/gt to $448/gt delivered. 


The market is losing some of its enthusiasm as the shadow of uncertainty looms over the pricing outlook for the rest of the first quarter. As stated above, some early indications this week point to the positive outlook fading slightly as some grades moved at declining values toward the end of trading. Mills are not expected to make drastic downward moves on high finished steel prices or HRC with 10-11 week lead times but may begin tempering them from the current levels.

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