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

Most Asian mills opted for domestic ferrous scrap this week amid wide disparity between imported and domestic prices. With Turkish bids for US-origin HMS 1&2 (80:20) falling by $6/mt on Monday from prior Friday, traders expect imported scrap prices to fall further. They indicated that many yards are not inclined to sell at lower prices and prefer to wait till Chinese New year with expectations of an increase in demand.


South Korea 

South Korean domestic ferrous scrap prices trended down this week. Suppliers reduced offer prices to match lower bids placed by mills. In the import market, Hyundai steel purchased 30,000 mt bulk scrap from Russia at $391/mt cfr this week and 45,000 mt of mix grades from the US at $398/mt cfr for March shipments.


The Davis Index for domestic Heavy A fell by KRW10,000/mt and KRW20,000/mt, respectively to KRW415,000/mt and KRW395,000/mt ($353.8/mt) delivered Incheon and Pohang, respectively. Mills could reduce their bids for domestic scrap next week amid scheduled maintenance, said traders. Most mills have enough inventory for the month. But the decline is expected to be lesser than that in the seaborne market amid tightening domestic supplies. 


The weekly Davis Index for domestic Light A fell by KRW22,000/mt at KRW370,000/mt delivered Pohang mill. Trades for the grade heard at KRW365,000-375,000/mt on Monday. Demand is expected to fall until Lunar New Year, said importers.



Tokyo Steel lowered #2 HMS purchase prices by JPY500/mt ($4.76/mt) to JPY38,000/mt del plant Tahara and JPY1,000/mt to other three steel plants while bids to Utsunomiya remained flat, effective Feb 3. Bids for other works at JPY37,500/mt del Okayama, JPY37,000/mt del plant Kyushu, JPY36,500/mt del Takamatsu and JPY29,000/mt del Utsunomiya. In January, Tokyo Steel reduced its ferrous scrap purchase price eight times. 


South Korean, Taiwanese and Vietnamese mills are expected to reduce ferrous scrap bids further in line with a fall in Japanese domestic scrap prices. Traders indicate that domestic finished steel demand in Japan remains sluggish due to which scrap exporters are focusing on other Asian countries to clear inventory.



The Davis Index for containerized US-origin HMS 1&2 (80:20), Tuesday, settled at $365/mt cfr Taiwan, up by $2/mt. Offers rose by $5/mt to $365/mt on Tuesday due to limited offers and tight supply by exporters. Traders indicated that many yards are keeping offers firm or waiting till Chinese New Year in anticipation of a price rise when mills return post their scheduled maintenance.


On Monday, offers for HMS 1&2 (90:10) from Central America in FEU heard at $365/mt cfr while bids at $360/mt. Taiwanese importers indicated that domestic scrap prices are still cheaper than imported. Mills claim finished steel prices are unviable amid sluggish steel demand as many infrastructure projects are stalled due to harsh winter and pandemic.


On Monday, Feng Hsin Steel reduced rebar and ferrous scrap prices by TWD800/mt ($28.57/mt) for February deliveries. After the revision, the steelmaker’s base price for rebar fell to TWD17,300-17,400/mt ex-southern mills.


The weekly Davis Indexes for domestic HMS 1&2 (80:20) fell by TWD800/mt this week to TWD10,150/mt ($362.5/mt) and TWD10,400/mt delivered South Taiwan and North Taiwan mills, respectively.



The weekly Davis Index for HMS 1&2 (80:20) fell by VND83,333/mt ($3.6/mt) this week to VND8,400,000/mt ($363.87/mt) delivered South Vietnam inclusive of taxes. Sluggish finished steel demand impacted ferrous scrap prices in Vietnam. Mills reduced bids for domestic scrap on global cues. A few deals for busheling heard at VND9,200,000/mt delivered South Vietnam on Tuesday.

In bulk, offers for Japanese HMS 1&2 (50:50) fell by $40-50/mt to $370-380/mt cfr on Monday. 



In China, Shagang Steel’s ferrous scrap purchase prices fell by CNY20/mt ($3/mt) on Monday from the prior week. Chinese HRC manufacturers were cautious of a possible cut in rebates to 8-9pc from 13pc to curb steel output. Semi-finished steel prices also fell due to sluggish demand amid production cuts to reduce pollution.


Iron ore prices for 62pc Fe, fell on Monday from the prior week to $156.5 cfr China down by $10/mt. Prices are likely to stabilize after Chinese New Year as demand rises and inventories fall.


Traders overseas expect Chinese demand for ferrous scrap to sustain in February after Lunar New Year holidays as steel mills start restocking. Japanese HS scrap offers reduced to $400-405/mt on Friday, down by $55-60/mt from the prior week. Importers indicated the current offers will be viable as the difference in domestic and imported scrap is negligible. No small bulk deals heard this week but Japanese exporters expect an increase in purchase after New Year.


The weekly Davis Index for the HMS 1&2 (80:20) fell by CNY20/mt at CNY3,200/mt ($495.6/mt) delivered mill. Deals for P&S 5ft heard at CNY4,000-4,020/mt this week. The market was bearish due to limited buying, cold weather, rising COVID-19 cases restriction and production cuts due to pollution control. 


On Tuesday, prices for Q235 150mm square billets in Tangshan rose by CNY30/mt to CNY3,860/mt ex-works including 13pc VAT from the prior week, while fell by CNY10/mt from Monday. Southeast Asian billet export offers were under pressure with buyers from the Philippines bidding at $575-580/mt, with few trades heard at the same price.



The weekly Davis Index for domestic HMS 1&2 (80:20) settled flat at THB11,500/mt ($383/mt) delivered Rayong mill inclusive of taxes, amid limited deals and weak global cues. Steel mills are expected to raise bids as they restock scrap inventory in anticipation of a rise in steel demand in mid-February. Several infrastructure projects are expected to be delayed following a rise in COVID-19 cases. 


Container shortage and vessel delays added to the woes of steel mills interested in short transit imports. Deals for HMS 1, P&S heard at THB12,400/mt and THB12,600/mt, respectively, on Monday. Thai steelmakers expect prices for HMS 1&2 (80:20) to remain unchanged until Lunar New Year amid limited supply.



The weekly indexes for HMS 1&2 (80:20) fell by MYR70/mt ($26/mt) to MYR1,450/mt ($375/mt), and MYR1,480/mt delivered western mills and eastern mills inclusive of taxes, respectively.


Malaysian steelmakers were cautious due to sluggish domestic steel demand amid an extension of lockdown in Malaysia. Exports also remained slow. Traders expect MYR100/mt fall next week on weak demand. Importers are closely watching Turkish and Chinese scrap purchases ahead of new bookings.


($1=JPY105; TWD28; CNY6.5; THB30; MYR4; VND23,085; KRW1,116)

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