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

Bangladesh continues to struggle with a surge in COVID-19 cases. The spread of the highly contagious Delta variant and an acute shortage of medical oxygen has prompted the government to extend the strict nationwide lockdown until July 14. Transport at the Indo-Bangladesh road border is likely to remain suspended to curb the spread of the virus. 


Mills are facing the dual challenge of a significant drop in domestic steel consumption and higher international raw material prices, especially for imported ferrous scrap. Supply of both melting and rolling scrap is tight in Bangladesh which is likely to further squeeze the profits margins of many mills. Barring a few government projects, demand from most end-users has slumped, and except for large mills, most furnaces are mulling production cuts to match weak demand in the monsoon season. 


The daily Davis Index for containerized shredded settled down by $1.25/mt to $550/mt cfr Chattogram on Monday. Trades were almost halted amid a wide disparity between offers and bids. Bids continued to stay below sellers’ expectations at $530-540/mt cfr. Offers for EU/UK origin-shredded are firm at $545-555/mt cfr Chattogram. Sellers kept their asking prices to Bangladesh higher by around $20/mt compared to Pakistan, to accommodate the freight variation between the two countries. 


The daily Davis Index for HMS 1&2 (80:20) from Latin America, Monday, dropped to $516/mt cfr Chattogram, down $2/mt. Bids for HMS 1&2 (80:20) dropped below $510-515/mt cfr Chattogram.


In a silent market, the daily index for US-origin containerized HMS 1&2 (80:20) settled at $526.25/mt cfr Chattogram, down $3.75/mt from Friday. The daily indexes for UK-origin and Australia-origin HMS 1&2 (80:20) were at $516/mt and $523/mt cfr Chattogram, down $4/mt each. 


Domestic market mute

The domestic availability of ferrous scrap reduced sharply in Bangladesh. Offers for ship scrap equivalent to P&S settled at BDT49,000-49,500/mt ex-yards. Amid weak sales, billet prices unchanged at BDT59,500/mt ex-works. 


For shipbreakers, offers of scrapped vessels flat at $550-560/mt cnf, depending on the type. But yards raised prices of scrap and plates on higher cutting costs. Ship demolition rates have dropped drastically since the beginning of the monsoon, adding to the domestic shortage. Shipbreaking plate offers for 16mm rose to BDT55,000/mt ex-yards on Friday, up by BDT1,500/mt from a week prior.

Amid diversion of oxygen for medical use, yards might have to again suspend cutting operations, which could further tighten scrap supply. 


For rebar, large-scale mills kept asking rates at BDT71,500-72,000/mt, ex-works. Mills were unable to offer any discount to boost sales amid very low margins. To hit parity with imported scrap, finished steel prices in Bangladesh need to rise by at least BDT2,000-3,000/mt. 



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