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

Bangladeshi steel mills stayed away from imported ferrous scrap bookings due to heavy monsoon rainfall and extension in stringent national lockdown restrictions. The spread of the Delta variant of COVID-19 and an acute shortage of medical oxygen has prompted the government to extend the lockdown until July 14. Imported ferrous scrap offers remained flat despite weak domestic fundamentals as supply is tight. Sellers expect demand to recover at the monsoon season close.  


Steel mills managed to operate, albeit at a very low capacity utilization. But steel retailers and contractors were away from purchases resulting in low working capital. The upcoming Eid holidays around July 21 could further slow down activities.


Mills faced the dual challenge of a significant drop in domestic steel consumption and firm international raw material prices, especially for imported ferrous scrap. The supply of melting and rolling scrap is tight in Bangladesh and the resulting rise in prices has led to a margin squeeze for mills.


The daily Davis Index for containerized shredded settled up by $0.5/mt to $548.75/mt cfr Chattogram on Wednesday. Deals were scarce amid a wide disparity between offers and bids. But recovery in prices in Pakistan and resumption in Turkish bulk purchases kept offers mostly unchanged. Only a few bids were in the market were at $530-540/mt cfr, which were below sellers’ expectations.


The daily Davis Index for HMS 1&2 (80:20) from Latin America, Wednesday, was at $514/mt cfr Chattogram, down $1/mt. Deals for HMS 1&2 (80:20) from Brazil were reported in the range of $510-515/mt cfr Chattogram. Sellers kept offers firm as they expect containerized freight charges to rise following the bulk rates.


In a silent market, the daily index for US-origin containerized HMS 1&2 (80:20) settled at $526.25/mt cfr Chattogram, unchanged on Wednesday. The daily indexes for UK-origin and Australia-origin HMS 1&2 (80:20) were at $514/mt and $522/mt cfr Chattogram, both down $1/mt.


The availability of domestic ferrous scrap reduced amid the lockdown. Offers for ship scrap equivalent to P&S were at BDT49,000-49,500/mt ex-yards. For rebar, large-scale mills kept asking rates at BDT71,500-72,000/mt, ex-works. Dhaka-based mills offered discounts to boost sales as trades reported at BDT67,500-68,000/mt ex works despite low margins.


Barring a few government projects, demand from most end-users has slumped. Except for large mills, most furnaces are mulling production cuts to match the weak demand.



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