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

Mills in South Korea, Taiwan and Vietnam raised bids last week with many traders indicating the market has peaked and prices are expected to fall due to sluggish demand in the coming days. Domestic scrap prices were flat to up in most regions this week.


With the Turkish index for US-origin HMS 1&2 (80:20), Monday, falling to $462/mt cfr, down by $2/mt from Friday, traders expect Asian bids for imported scrap to fall. A few yards have kept offers firm on ferrous scrap and container shortages. Suppliers are focusing on completing prior shipments, which were held back due to vessel delays. 



Tokyo steel kept bids unchanged from Friday amid sluggish domestic demand for steel and stiff competition from China in export markets. Bids for #2 HMS heard at JPY42,500/mt ($391/mt) delivered Tahara, JPY41,500/mt delivered Okayama, JPY41,000/mt delivered Kyushu, JPY42,500/mt delivered Utsunomiya and JPY40,500/mt delivered Takamatsu, on Tuesday. Market participants expect prices to fall as South Korean, Vietnamese and Taiwanese mills halted purchases in anticipation of a drop in global scrap prices this week.


South Korea 

Domestic scrap prices in South Korea trended up this week. Mills raised bids in the latter part of last week and kept them flat on Tuesday with a focus on domestic scrap purchases for immediate requirements. Bids rose after Hyundai raised bids for Japanese scrap by JPY3,000-4,000/mt last week. Most mills raised bids, but Daehan Steel reduced #2 HMS bid to JPY43,000/mt ($399.25/mt) fob, JPY500/mt lower than Hyundai’s last bid which lifted prices.


The Davis Index for domestic Heavy A rose by KRW11,250/mt ($9.9/mt) to KRW435,000/mt ($382.4/mt) and KRW37,500/mt to KRW452,500/mt delivered Incheon and Pohang, respectively. Few mills are likely to reduce bids in the coming days due to piled up inventory and the arrival of March imported scrap shipments, said traders. 


The weekly Davis Index for domestic Light A rose by KRW35,000/mt to KRW420,000/mt delivered Pohang mill. With current Japanese scrap offers unviable, mills could turn to domestic scrap for immediate requirements.



The Davis Index for containerized US-origin HMS 1&2 (80:20), Tuesday, fell by $2 to $434/mt cfr Taiwan from Friday. Offers fell to $435-440/mt cfr amid sluggish demand, while bids fell $5/mt to $430/mt cfr. Taiwanese buyers were cautious and closely watching falling Turkish and Chinese bids.


The weekly Davis Indexes for domestic HMS 1&2 (80:20) settled flat at TWD11,250/mt ($397.4/mt) and TWD11,500/mt delivered South Taiwan and North Taiwan mills, respectively. Feng Hsin raised bids by TWD200/mt this week, while other mills kept bids lower in anticipation of a fall on global cues. 


On Tuesday, limited offers for HMS 1&2 (70:30) from Central America in FEU heard at $420/mt cfr down $5/mt from the prior week. Taiwanese importers indicated that domestic scrap is still cheaper than imports but supply remains tight. 



The weekly Davis Index for domestic HMS 1&2 (80:20) was flat at VND8,950,000/mt ($386.6/mt) delivered South Vietnam inclusive of taxes. Prices fell by VND15,000/mt for northern mills at VND8,700,000/mt. With sluggish finished steel demand in the domestic and export markets, steel mills were cautious of any scrap purchases. Two USWC bulk deals heard at $474/mt cfr and $477/mt cfr in the prior week, with traders expecting a drop in prices.


Most mills are negotiating for bulk over containerised due to a shortage of empty boxes in supplier destinations, but with bids falling from other countries, Vietnamese mills are yet to bid for Japanese scrap this week.


Low domestic scrap availability and anticipation of a further rise in prices prompted enquiries. Vietnamese mills were cautiously watching Turkish buying prices and Chinese bids for Japanese scrap.


A few deals for busheling heard at VND9,700,000/mt delivered South Vietnam on Tuesday.



In China, Shagang Steel ferrous scrap purchase prices remained flat this week, while iron ore prices for 62pc Fe rose by $2/mt to $176/mt cfr Qingdao on Monday from the prior week. With iron ore futures falling by 9-10pc on Tuesday amid pollution-related production curbs, traders expect scrap prices to fall. Chinese mills could focus on imported billets to fulfil domestic and international finished steel demand.


The weekly Davis Index for the HMS 1&2 (80:20) settled flat at CNY3,350/mt ($514/mt) delivered mill, from the week prior. Price fell by $2/mt on account of currency depreciation. Steel prices are expected to be under pressure due to rising restriction and harsh weather.


In Tangshan, Q235 150mm square billets rose by CNY160/mt at CNY4,420/mt($658/mt) amid firm domestic demand. But with steel futures falling by 3-5pc, domestic billet prices are expected to be under pressure.


Japanese HS scrap offers remained firm at $505-515/mt cfr, Tuesday, while bids at $495-500/mt cfr.



The weekly Davis Index for domestic HMS 1&2 (80:20) rose by THB200/mt($6.5/mt) to THB12,800/mt ($416/mt) delivered Rayong mill inclusive of taxes, amid deals at THB12,600-13,000/mt delivered mill. Mills raised bids after prior weeks rise in offers and domestic scrap shortage. Steel mills are expected to restock scrap inventory this week and are cautiously tracking Turkish and Asian buyers’ purchase prices.


Deals for domestic P&S 5ft heard at THB13,300/mt on Tuesday, with mills preferring domestic scrap or imported billets amid rising raw material prices. Container shortage and vessel delays added to the woes of steel mills who are more interested in short transit imports. 


Billet deals heard at $580/mt fob India, with the expectation of a rise in demand from Asian countries due to rising raw material cost.



The weekly indexes for HMS 1&2 (80:20) unchanged at MYR1,470/mt ($357/mt), down by $5/mt on currency depreciation and MYR1,500/mt delivered western mills and eastern mills inclusive of taxes, respectively.


Malaysian steelmakers are cautious amid falling global scrap prices. Trades slowed with offers for US-origin HMS 1&2 (80:20) in FEU at $405/mt unchanged from the prior week. Steel mills preferred domestic scrap as it remained competitively-priced than imports. Mills have ample inventory for March and are focusing on domestic scrap for any immediate demand, said traders. 


($1=JPY107.7; TWD27.9; CNY6.5; THB30; MYR4; VND23,151; KRW1,137.7)

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