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

The US West Coast dock prices for ferrous scrap resumed their climb after remaining rangebound last week. Ferrous tags in San Francisco and Los Angeles adjusted upwards due to tight scrap flows and continued export demand. 


In fact, docks began rolling out price increases of $10/gt to vendors in Los Angeles on Tuesday, while San Francisco docks increased their prices by $20/gt. However, few market participants reported taking inventories to docks in Los Angeles, preferring instead, for effective price increases to come into play.


Firm offers of $350/mt cfr Turkey are being heard for US-origin HMS 1&2 (80:20), up $53.50/mt from an early US-sourced November deal. Turkish mills are now faced with the prospect of higher-priced scrap deals owing to strong local and international rebar sales along with a tight global scrap supply and high demand from Asian buyers. 


The sentiment for scrap and steel demand remains optimistic for Q1 2021, despite diverging opinions on the impact of potential COVID-19 related lockdowns on supply chains. Dockside scrap prices continue an uptrend in the EU and have taken a pause in increases in the UK. 


Japanese domestic scrap prices are rising depending on mill needs. Tokyo Steel recently increased its prices at two sites, but they remained unchanged at three others. Raw material price rises are leading to increases in finished steel tags. Some participants question the sustainability of the latter on higher raw material prices worldwide unless more economic gains are evident. Japanese export prices, however, are unlikely to soften in the short term.


A slight softness in iron prices may put downward pressure on imported scrap in Asia. Taiwan’s domestic scrap prices are increasing as mills prefer locally sourced material to higher-priced imported scrap. In South Korea, domestic prices were mostly flat week-on-week. Domestic scrap prices in Thailand increased but dropped in Malaysia. Indian buyers remained active this week in the import market, but domestic scrap and ingot prices softened over the past week. 


Much is dependent on the influence of China. An increase in billet buys from Chinese consumers will also raise production schedules in December and January in South Korea and other Asian countries. Some participants are wary of China’s ability to continue supporting iron ore, semi-finished steel, and ferrous scrap prices. A dramatic slide is not expected, but a pause through December could be possible. 


Vietnam’s demand for steel continues strong and could continue its recovery as buyers seek bulk scrap volumes though buyers are resisting higher offers. 


The US domestic scrap market is looking more dynamic this week with several dealers forecasting starting points of up $50/gt against November settled prices which could increase further during negotiations. A large increase in US domestic mill prices could make scrap prices more expensive for the export market. 


The weekly Davis Indexes in Portland were flat for the second straight week with #1 HMS remaining at $234/gt and P&S 5ft flat at $249/gt, but shredder feed increased by $2/gt to $190/gt.  


In San Francisco, the Davis Indexes for #1 HMS increased by $21/gt to $282/gt delivered, P&S 5ft rose by $22/gt to $288/gt delivered, and shredder feed climbed by $5/gt to $179/gt delivered. 


Los Angeles’ Davis Indexes increased nominally as new pricing was announced at the end of the day. The Davis Indexes in Los Angeles increased by $3/gt for #1 HMS at $200/gt delivered, P&S 5ft rose by $2/gt to $210/gt delivered, and shredder feed went up by $4/gt to $152/gt delivered.  


The containerized market in Los Angeles remained stable with upward momentum. Most market participants reported deals for #1 HMS at $280-290/mt fas, up by $5/mt from the top of the range last week. A few buyers reported buys at $275-280/mt fas during the period while other sellers anticipate deals at $295/mt fas toward the end of this week.

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