US West Coast dockside ferrous scrap prices continued to remain rangebound for the second successive week. The docks at Los Angeles, San Francisco, and Portland have not announced higher prices. They continue seeking scrap and have paid $5-10/gt more in limited circumstances to attract volume deals pointing toward strength in the market despite lower active buys and prices from Asia.
The Davis Index for US-origin HMS 1&2 (80:20) fell by $7.12/mt to $454.82/mt cfr Turkey on Tuesday from $461.94/mt cfr on Aug 10. Lower bid prices in the international market, limited global scrap inventories, strong prices to Mexico, high US domestic market prices, and the potential for additional bulk shipments by Asian scrap buyers as they resume business post-recent lockdowns have kept prices low.
In 2020, such price trends had resulted in domestic scrap options drops due to the contraction of peddler activities along with a delay in demolition projects and backlogged scrap yard processing. Thus, some market participants expect a surge in interest from import buyers towards the end of summer.
September trading outlook for US domestic scrap remains sideways to a fall of $10-20/gt depending on grade and region against August settled prices. Strong US domestic prices and volume demand along with continuing demand from Mexico, is not allowing a fall in dock prices according to market participants.
The global scrap market is awaiting cues from the upcoming Japanese Kanto scrap auction. Japanese ferrous scrap prices are mostly unchanged this week with limited scrap collection volumes due to ongoing holidays.
South Korean mills are shut due to maintenance or are operating at lower capacities per energy restrictions so domestic scrap prices have contracted but the supply tightness continues and is anticipated to support higher prices upon buyers’ return to import negotiations for Q4 deliveries.
In Bangladesh, production is expected to regain momentum in the autumn if the recent COVID-19 pandemic cases come under control. This Asian country has purchased bulk vessels from the West Coast in the past and may do so again given the high freight costs and difficult container availability.
The weekly Davis Indexes in Portland for export yard P&S 5ft and shredder feed rose by $1/gt to $405/gt delivered and $290/mt delivered export yard, respectively. #1 HMS climbed by $2/gt to $385/gt as some docks paid extra to entice scrap sellers. Taiwanese mills have recently lowered some finished steel prices along with scrap prices but are expected to begin to rise as construction activity expands in the fall.
The San Francisco weekly Davis Index for #1 HMS increased by $1/gt to $386/gt delivered while P&S 5ft trended flat at $400/gt delivered. Shredder feed is showing an upward trend but for the week remained unchanged at $288/gt delivered.
In Los Angeles, the Davis Indexes were unchanged across all grades with #1 HMS at $340/gt, P&S 5ft at $353/gt delivered, and shredder feed at $254/gt delivered.