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

Domestic ferrous scrap prices in most Asian markets were on ‘flat to down’ trend as steel makers struggled with weak finished steel demand. Prolonged inactivity and increasing supplies lowered scrap prices this week. Tokyo Steel in Japan, Feng Hsin in Taiwan held prices flat for domestic scrap procurement while Shagang Steel in China and Hyundai Steel in South Korea lowered domestic scrap purchase prices.



Japan’s ferrous scrap prices were flat after rising last week. In some regions, prices dropped by JPY500-1000/mt as supplies eased but demand is yet to recover. Japanese currency appreciated to 104.5 against the US dollar from 105.5 a week earlier. Japanese traders were away on a national holiday, Autumnal equinox day on Sept 22. 


Tokyo Steel has held its domestic scrap procurement prices flat since Sep 15. Prices for all grades of ferrous scrap rose by JPY1,000/mt ($9/mt) delivered Tahara plant and JPY500/mt delivered Kyushu plant. Since then scrap prices have remained flat seeking more clarity from global markets.


The purchase prices for #2 HMS remained JPY27,000/mt ($255/mt) delivered Tahara works. New bids for busheling for deliveries to Tahara and Kyushu work are at JPY30,000/mt and JPY28,500/mt delivered works, respectively. Bids for #2 HMS and busheling are at JPY26,000/mt and JPY28,000/mt delivered Utsunomiya and JPY25,500/mt and JPY26,50/mt delivered Okayama mill, respectively.


In the Kanto region, #2 HMS was offered at JPY27,500-28,000/mt fas port on Tuesday, down by JPY500-1,000/mt. In the export market, #2 HMS traded at JPY28,000-28,500/mt fob Japan, down JPY500/mt. Mills in Vietnam and South Korea bought#2 HMS equivalent at $305-310/mt cfr Vietnam. HS and shindachi scrap in small bulk cargo was offered at $325-330/mt cfr Vietnam. 


South Korea 

South Korean domestic ferrous scrap prices are on a downtrend for the last two weeks, ignoring limited supplies from exporters. Mills focused on either domestic scrap or low-priced Russian bulk for faster deliveries. As expected, prices dropped sharply by KRW10,000-20,000/mt as Hyundai and other mid-size mills bought limited quantities. Buyers have opted to wait before resuming imported scrap bookings as finished steel demand remains sluggish in Korea. Higher Kanto bids in September have also added to the vows of Korean importers, who have been buying lower-priced Russian cargo to reduced input costs.


The Davis Index for domestic Heavy A delivered Incheon and Pohang, Tuesday, dropped by KRW17,500/mt ($15/mt) to settle at KRW315,000/mt ($271/mt) and KRW310,000/mt delivered mills, respectively, with major steel mills like Hyundai, Donkuk and others buying at index prices. 


The weekly Davis Index for domestic Light A was at KRW280,000/mt delivered Pohang mill, down KRW10,000/mt. Limited trades for the grade were reported at the index price as mills focused on buying special grades for high alloy making purposes. 


In seaborne trades, late last week, Hyundai Steel mills bought huge volumes delivered in a couple of bulk vessels from Russia. The company booked 80,000mt at $303/mt cfr South Korea. 



Rebar and billet prices have remained flat in Taiwan amid slow trading activities. Steelmaker Feng Hsin Steel held domestic ferrous scrap prices flat anticipating a drop in the coming days. On the other hand, most mills lowered bids as yards come under pressure to sell this week. Feng Hsin’s base offers for rebar and billets were flat at NT$15,000/mt and NT$13,500/mt ex-works, respectively. 


The weekly Davis Indexes for domestic HMS 1&2 (80:20) in South and North Taiwan was at NT$7800/mt ($268/mt) and NT$8,000/mt delivered mill, respectively, on Tuesday, down NT$700/mt from the prior week. 


In seaborne markets, US-origin containerized HMS 1&2 (80:20) offers dropped to $275-280/mt cfr Taiwan with very limited deals heard at $277-280/mt cfr Taiwan. The daily index for containerized US-origin HMS 1&2 (80:20) settled at $277/mt cfr Taiwan, down $1/mt from a day prior. Market participants are expecting trades at $275/mt cfr this week. Buyers refused offers of $285/mt cfr Taiwan from US suppliers. Bids for South American scrap were at $260-265/mt cfr Taiwan stable from a week ago.



The weekly Davis Index for HMS 1&2 (80:20) fell by VND280,000/mt ($12/mt) to VND6,660,000/mt ($287/mt) delivered South Vietnam, inclusive of taxes, with limited deals heard at index prices. Vietnamese mills remained cautious of bookings imported scrap expecting the prices to drop further in the coming days. 


Mills were under pressure as low-priced HRC offers from China pulled down domestic sentiments. Most Vietnamese mills last week bought higher volumes than usual and are waiting for more clarity on the prices. 


The auto sector is driving flat steel demand and imports, but domestic production is yet to reach 100pc capacity. In the export market, HRC prices reported at $520-525/mt fob Vietnam. 


In the bulk market, Japanese #2 HMS offers lowered by $5/mt to $305-310/mt cfr Vietnam against a few trades heard at $310/mt cfr last week. Vietnamese billet suppliers focused on exports with firm offers for October and November shipments. Offers for billets were at $440-445/mt cfr China against bids of $435/mt cfr China.



In China, Shagang Steel held domestic finished steel prices stable for end-September deliveries while it kept domestic scrap prices flat. #2 HMS (6-10mm thickness) was at CNY2,730-2,750/mt ($402-405/mt) del Jiangsu mill, inclusive of 13pc VAT. The weekly Davis Index for the grade settled at CNY2,730/mt delivered mill down by CNY110/mt from prior Tuesday. 


Prices for billets in the domestic market were at CNY3,320/mt ex-Tangshan mill on Tuesday, down by CNY120/mt from a week earlier. Chinese mills have increased HRC export offers as domestic demand slowed down. Domestic scrap prices in China are expected to remain on a downtrend in the coming days. 



The weekly Davis Index for domestic HMS 1&2 (80:20) fell by THB150/mt ($5/mt) and settled at THB9,450/mt ($301/mt) delivered Rayong mill inclusive of taxes, with trades at the index price. Sluggish finished steel demand this week limited ferrous scrap purchase by Thai mills. 


Imported billet prices dropped by around $10/mt to $440-450/mt cfr Thailandpulling imported scrap buying bids down this week. Most mills preferred domestic material over imports as overseas suppliers continued to raise offers.


In seaborne markets, limited deals for US-origin containerized HMS 1&2 (80:20) were heard at $260-265/mt cfr while offers were at $275-280/mt cfr Thailand. Offers for shredded dropped to $305-310/mt cfr Thailand, while bids for Australian-origin HMS 1&2 (80:20) Tuesday were at $280-285/mt cfr Thailand.



The weekly indexes for HMS 1&2 (80:20) dropped by MYR60/mt and MYR40/mt to MYR1,000/mt ($242/mt) and MYR1,080/mt ($271/mt) delivered western mills and eastern mills including taxes, respectively. Limited trades were heard at the index price. Market participants are expecting demand for finished steel to pick up in mid-September and October when the government-funded infrastructure projects are expected to gain momentum. 


Drop-in bids from Malaysian mills for imported scrap prices reduced trades. Most Hong Kong and South Korean suppliers expect Malaysian ferrous scrap consumption to increase in the coming days in absence of demand from Indonesia, where importers are staying away on new regulation, effective Oct 1. 


 ($1= JPY104.5; NT$29.04; CNY6.8; THB31.37; MYR4.1; VND23,210; KRW1,163)

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