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

The northern docks on the US West Coast saw substantial price increases while prices in Los Angeles trended flat, in a reversal from last week.


The Turkish scrap import daily index for US-origin HMS 1&2 (80:20) increased by $9.25/mt to $481.25/mt cfr on Tuesday from $472/mt cfr a week ago. Turkish mills have proceeded with inquiries throughout the US East Coast but have not bid actively. 


However, Turkish bids may not drop the current prices significantly, if at all, given the strong US domestic market and export competition with Asian buyers along with the possibility of Chinese bulk buys. Turkish mills started decreasing domestic scrap buying prices last week with more cutting prices this week. Given the global dynamics, it is uncertain whether the tight domestic market will continue accepting lower prices. 


Indian buyers are expected to return to the ferrous market to meet mill requirements in the midst of reduced domestic trades due to weather conditions and continued COVID-19 precautions. Demand for scrap continues along with limited scrap inflows that may not increase until February and March. Market participants forecast better flows on stronger prices and improved weather conditions in the spring. Until then, buyers are optimistic that strong domestic steel demand will support higher finished steel prices on greater input costs. The continued expectation that China will increase infrastructure activity also supports export markets throughout Asia as well as Chinese steel imports.


Pakistan buyers are waiting for further domestic cues and import price direction. Bangladeshi buyers have also balked at the higher import prices but a stimulus package, tight domestic scrap, low inventories, and continued demand in an emerging market may support buys given the stronger global market dynamics. 


Buyers in South Korea, Taiwan, Vietnam, Thailand, and Malaysia are all facing higher domestic scrap prices. South Korea is showing a limited outlook for bulk scrap buys on higher import prices, while Taiwanese buyers are raising finished steel prices and Vietnamese mills are seeking clarity in the import scrap market to combat the rising domestic prices. Despite the hesitation, market participants believe that buyers will have to support the higher import prices to meet steel production schedules at least through Q1 2021 until scrap volumes can increase and end-market demand becomes more transparent. 


Japanese scrap prices, an alternative to US scrap, continue increasing and maintaining firm levels as well. China could purchase several bulk vessels from Japan, which would further support US prices. Export scrap offers have firmed up or remained limited in Australia, Russia, EU, UK, UAE, and South America on the expectation of higher prices in January bulk deals. 


In Portland, the weekly dock Davis Indexes encountered a substantial increase after being rangebound by late December. The index for #1 HMS rose by $49/gt to $344/gt delivered as P&S 5ft climbed by $50/gt to $356/gt delivered. The index for shredder feed increased by $19/gt to $249/gt delivered.


The San Francisco Davis Indexes leaped this week after being flat in the last week of December. The index for HMS #1 increased by $61/gt to $353/gt delivered, P&S 5ft climbed by $63/gt to $364/gt delivered, and shredder feed rose by $24/gt to $224/gt delivered. 


The weekly Davis Indexes for dock prices in Los Angeles remained unchanged with #1 HMS at $310/gt delivered, P&S 5ft at $321/gt delivered, and shredder feed at $221/gt delivered. Los Angeles dock indexes surpassed those in Portland and San Francisco for a few weeks but have now returned to lower levels in comparison. 


After container prices trended up for 12 consecutive weeks, prices have trended flat in the first few days of January. HMS 1&2 (80:20) deals out of LA were at around $405-425/mt fas last week. Market participants report continued activity in the range with some bids that reached the higher end beginning to soften for HMS 1&2 (80:20) yet remaining flat for P&S 5ft. 


Containerized HMS 1&2 (80:20) prices are about $150-175/mt higher now compared to early October with the expectation of continued support due to demand from Asian buyers, Mexican mills, and other South American destinations through Q1 2021. The availability of containers continues to remain a concern, but several participants expect the issue to ease in late Q1 2021 as economic trade continues to stabilize.

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