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

Imported ferrous scrap offers in East Asian markets are falling amid softened demand. Offers for Southeast Asian billets continued to drop as sentiment weakened in the Chinese steel market. Pressure from authorities is likely to keep steel price in check at least in the near terms, believe market participants. 


China’s National Development and Reform Commission announced it would strengthen commodity price controls as a part of its 14th five-year plan from 2021-2025. Most of these actions are directed toward capping the prices of iron ore, steel and copper which the government claims are unreasonably high and have abnormally fluctuated. Copper and steel are important raw materials for manufacturers and industries and their price rise has a tendency to hinder economic growth. The Chinese regime wants to sustain the growth of its economy to recover from the impact of the COVID-19 pandemic and has thus taken a serious stance on commodity price hikes.  


Initial reactions to China’s warning on steel prices turned scrap buyers bearish with sellers being pessimistic of global cues including active buying by Turkish mills.  



The weekly Davis Index for containerized #1 HMS dropped by $20/mt to $463/mt cfr Taiwan port whereas the index for shredded was down by $20/mt to $472/mt cfr Taiwan port.  


Demand continued to be under pressure in Taiwan, which could lead to a further drop in prices. The indexes for P&S 5ft went down by $20/mt to $482/mt cfr Taiwan while #1 bushelling dipped by $20/mt to $488/mt cfr Taiwan port.  



The weekly Davis index for containerized #1 HMS, Thursday, dropped by $19/mt to $474/mt cfr Vietnam. Shredded, P&S 5ft and #1 bushelling dropped to $484/mt, $493/mt, and $498/mt; down by $18/mt, $19/mt, and $19/mt, respectively. Offers for US-origin HMS 1&2 (80:20) dipped to $466/mt cfr Vietnam, down by $19/mt from last Thursday.


Steel prices are affected by the fall in billet and scrap prices amid wet weather. Mills are struggling to secure their margins and keep prices steady. 



The weekly index for P&S 5ft dropped by $17/mt to $508cfr Indonesia port. The Davis Index for shredded decreased by $17/mt to $503/mt cfr Indonesia port. Offers for P&S 5ft in the range of $495-$505/mt. 


Steelmakers are likely to stay away from imports and focus on the lower-priced domestic scrap to maintain margins in the coming days. 



Tokyo Steel has kept its ferrous scrap purchase bids unchanged since May 18. The bids for #2 HMS are at JYP51,500/mt delivered Tahara works, JYP50,000/mt delivered Okayama, JPY50,000 delivered Kyushu, JPY48,000/mt delivered Utsunomiya, and JPY48,500/mt delivered Takamatsu. 


($1= JPY109.10, TWD27.78, VND23056.06, IDR14,287.90)

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