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

Mills in Taiwan, Vietnam and other Asian countries raised bids for domestic scrap amid higher prices and delays in securing imported scrap. Demand for domestic scrap is driven by a rise in freight rates, container shortages and a tight supply of domestic scrap due to the pandemic.


Asian buyers raised bids for imported and domestic scrap in anticipation of a further rise in freight rates in May. The Davis Index for US-origin HMS 1&2 (80:20), Monday, fell by $1/mt to $430.75/mt cfr Turkey from Friday due to Ramadan holidays.


South Korea 

South Korean mills kept domestic scrap bids flat on Tuesday. Major steel mills were negotiating for bulk deals from Australia, Russia and the US instead of containerised to avoid delays. The weekly Davis Index for domestic Heavy A settled unchanged at KRW435,000/mt ($387/mt) and KRW455,000/mt delivered Incheon and Pohang, respectively. Mills are expected to raise bids next week on low inventory, said traders.


The weekly Davis Index for domestic Light A settled unchanged at KRW430,000/mt delivered Pohang mill. With the rise in enquiries from Chinese mills this week and higher offers post-Kanto bids in Japan, South Korean mills turned cautious and are closely watching purchases by other Asian countries.



The daily Davis Index for containerized US-origin HMS 1&2 (80:20), Tuesday, rose by $5/mt to $429/mt cfr Taiwan from the prior day, while the index gained $16/mt from the prior Tuesday. Taiwanese mills raised bids to $425/mt from $420/mt on Monday. Fewer deals concluded as bids chased offers that kept rising on tight supply. 


Most yards are expecting a further rise this week as mills are low on inventory and are expected to raise bids. Offers rose by $5-10/mt cfr from Friday to $430-435/mt cfr on Tuesday amid container shortage and vessel delays. Many traders indicated that freight rates might rise further in May driving prices higher.


The weekly Davis Indexes for domestic HMS 1&2 (80:20) rose by TWD500/mt($17/mt) to TWD11,200/mt ($367.5/mt) and TWD11,400/mt delivered South Taiwan and North Taiwan mills, respectively. Feng Hsin raised domestic scrap bids by TWD500/mt on Monday and raised rebar offers by TWD700/mt to TWD19,100/mt ex-works.


On Tuesday, few offers for HMS 1&2 (70:30) from Central America in FEU heard at $410-415/mt cfr up $10-20/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) rose by VND180,500/mt ($7.8/mt) to VND9,180,500/mt ($396/mt) delivered South Vietnam inclusive of taxes. Some traders expect bids to rise further on improved finished steel demand and higher raw material prices globally. 


Bulk HMS 1&2 (80:20) offers from the US west coast rose to $460/mt cfr Vietnam up $5/mt from the week prior. Most mills opted to bid for bulk over containerised due to a shortage of empty boxes at supplier destinations. A few deals for busheling in the domestic market heard at VND9,780,000/mt delivered South Vietnam on Tuesday.



In China, Jiangsu Shagang Group lifted prices of long and flat finished steel products by CNY100-300/mt ($15-46/mt) for early April deliveries. 


Price of Fe 62pc iron ore rose by $5/mt cfr to $173/mt cfr Qingdao on Monday from the prior week. With bullish steel, coal and iron ore futures and stricter production curbs, market participants expect good demand for ferrous scrap in the coming days. Many traders from China are negotiating and asking for more offers in anticipation of a rise in imported ferrous scrap demand from mills. 


Mills also focused on importing billets to fulfil domestic and international finished steel demand. Domestic billet prices dropped this week due to volatile Chinese futures and curbs on finished steel exports. Billet price fell by CNY170/mt to CNY4,890/mt($746.7/mt) ex-mill from the prior week.


The weekly Davis Index for the HMS 1&2 (80:20) rose by CNY35/mt to CNY3,460/mt ($523/mt) delivered mill from the prior week. Bids for imported scrap rose following the limited availability of domestic scrap. 



The weekly Davis Index for domestic HMS 1&2 (80:20) rose by THB500/mt ($15.8/mt) to THB13,400/mt ($424/mt) delivered Rayong mill inclusive of taxes. Deals heard at THB13,300-13,500/mt delivered mill. Mills raised procurement for domestic scrap amid rising freight cost and the halt of exports from Malaysia. 


Many steel mills avoided imported scrap bookings due to Ramadan holidays and preferred domestic material for immediate requirements. Market participants further added that due to shortage of domestic scrap and anticipation of higher freight in near future, mills might opt to purchase imported scrap to restock inventory.


Deals for domestic P&S 5ft heard above THB13,800-14,000/mt on Tuesday, with mills preferring domestic scrap or imported billets. Offers for billets heard at $660/mt cfr China unchanged from the prior week with no deals heard. Demand is slow as buyers wait to gain clarity on the price direction. 



The weekly indexes for HMS 1&2 (80:20) settled unchanged at MYR1,520/mt ($367.6/mt), and MYR1,550/mt delivered western mills and eastern mills inclusive of taxes, respectively. Offers for domestic P&S 5ft heard at MYR1,850-1,880/mt delivered mill on Tuesday. Most Malaysian mills have halted purchases ahead of Ramadan and are expected to start trading in the next week.


Malaysia’s 15pc duty on exports of ferrous scrap has raised the land cost of scrap for buyers in import destinations. But this could lower the country’s dependency on imports. Some traders expect higher demand for domestic scrap in the coming weeks which could spike bids.


($1=JPY109; TWD28.5; CNY6.5; THB31.5; MYR4; VND23,202; KRW1,123.7)


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