Ferrous week summary: Davis Index

Turkey

• The daily Davis Index for Turkish imports of US-origin HMS 1&2 (80:20) increased by $13.07/mt to $220/mt cfr on Friday amid higher demand and reduced supply.
• A few Turkish mills were in the market for ferrous scrap cargoes during the week but couldn’t find any at their desired bid levels. Even after increasing their bids for HMS 1&2 (80:20) from the US and Baltic region to $210-215/mt cfr suppliers resisted. 
• Scrap availability is limited because collection around the globe has declined significantly, and most exporters have claimed they have not put out any offers. Some suppliers expect prices to rebound to $225-230/mt cfr for HMS 1&2 (80:20) from the US and Baltic region in the coming days. Some are targeting prices of $240/mt and higher.
• There is also a lack of sellers in the Azov-Black Sea basin, and Turkish mills have expressed interest in short-sea cargoes. Suppliers have targeted minimum prices equal to the most recent deal, but buyers are still searching for lower prices. Within the last couple of days, an exporter from Rostov-on-Don sold HMS 1&2 (90:10) for $224/mt cfr Marmara.
• Trading in the Turkish rebar market picked up earlier in the week as inventory replenishment began. As a result, spot prices increased by TRY60-100/mt ($9-15/mt) across Turkey and settled in the range of TRY3,060-3,100/mt ex-works, including 18pc VAT, on Friday.

USA: Lack of clarity prevails before US April trade (March 30)

• A significant decrease in April scrap prices is expected although the range of decline remains wide. Most market participants are somewhere in the range of $40-80/gt with $50/gt holding higher consensus. Prime grades could decline to a lesser extent. Lower buying programs and regional influence expected.
• Some sellers continue to receive scrap on a large, industrial scale with a few completing uncancelled March scrap orders, this week. Yards have also lowered the intake feed prices by about $60-70/gt in anticipation of April price decreases.
• Several scrap dealers report implementing further COVID-19 safety precautions at yards through the weekend and small retail operations have been temporarily closed 
• Gerdau in Ft. Smith, Arkansas has informed suppliers they will resume the receipt of scrap later this week, if possible, with plans to restart operations on a limited basis to fill existing orders. The company suspended scrap receipts on March 20 citing auto shutdown concerns.
• Market participants in the south and southeastern US told Davis Index that industrial production and demolition activity has decreased by at least 50pc and in some cases, demo work and construction have almost stopped. The few projects still operating are classified as essential.
• Most stamping plants that support automaking, have shut down in tandem with the automotive industry, heavily impacting industrial accounts with integrated steel mills. Market participants in the Midwest estimate industrial flows to have declined by about 50-75pc as local steel mills have curtailed operations the most.
• Gerdau in Cartersville, Georgia has told suppliers it will idle until mid-April mostly due to the slowdown in foundry customers. 
• Rebar mills reported typical volume buying programs for April, so far. Of concern is the slowdown in bookings for late May and June.

Mexico: Ferrous scrap prices up

• Mexico’s weekly domestic ferrous scrap prices increased on Friday as scrap collection remained low amid dwindling supply.
• In Mexico’s northern region, the weekly Davis Index for HMS 1&2 (80:20) rose by MXN100/mt to MXN5,800/mt ($234.9/mt) delivered Mexico consumer on Friday. The index for machine shop turnings increased by MXN300/mt to MXN4,900/mt delivered and rose for #1busheling by MXN100 to MXN5,800/mt delivered. The index for P&S 5ft in the north increased by MXN100/mt to MXN5,700/mt delivered Mexico consumer.
• The Davis Index in the Bajío region increased by MXN333/mt to MXN5,783/mt delivered Mexico consumer for HMS 1&2 (80:20), and rose by MXN375/mt to MXN5,000/mt delivered for machine shop turnings. The index for #1busheling rose by MXN325/mt to MXN5,950/mt delivered and moved up by MXN342/mt toMXN5,667/mt delivered for P&S 5ft.
• In the central region, the index rose by MXN400/mt to MXN5,700/mt delivered Mexico consumer for HMS 1&2 (80:20) and by MXN400 to MXN4,900/mt delivered for machine shop turnings. The index for #1 busheling in Central Mexico fell by MXN400/mt to MXN5,800/mt delivered on Friday and declined by MXN400/mt to MXN5,800/mt delivered for P&S 5ft.
• Market participants expect the lower scrap collection in the north, central, and the bajío region could result in material shortages this month. The suspension of activities from the automotive industry to protect employees from COVID-19, will also affect scrap demand. ($1= MXN24.68)

CIS pig iron

• The weekly Davis Index for CIS basic pig iron dropped by $16/mt to $281/mt fob Black Sea on Friday due to a lack of buyers.
• Demand for pig iron from the CIS remains weak, with China the only buyer. Some negotiations are in progress, although no deals have reported yet early April. Bids from China decreased to $305-310/mt cfr after active bookings at $325-330/mt cfr during the second half of March. According to market participants, China purchased around 500,000mt of pig iron from the CIS and Brazil.
• Italy’s pig iron market is still inactive as the country remains on strict lockdown to contain COVID-19. As a result, the weekly Davis Index for the CIS pig iron in Italy, which is still based on current fob prices, dropped by $18/mt to $305/mt cfr on Friday.

Europe dockside (March 31)

• The weekly Davis Index for HMS 1&2 (75:25) in the ARAG declined by €3/mt ($3/mt) to €147/mt delivered dockside on Tuesday.
• Dockside ferrous scrap prices continue to decrease in the Netherlands and Belgium, but at a slower pace because of anemic inflow of the material. Scrap generation of prime grades is low as many automotive factories suspended operations due to COVID-19. Demolition is sluggish as well.
• Some small scrap yards in Europe suspended operations amid the pandemic, while others cut down on their work timings, which impacted scrap collection volumes. Considering all these reasons, market participants estimate scrap collection in Europe has fallen by at least 40pc.
• Demand for European scrap remains weak on export, specifically in Turkey, but offers are scarce too as many suppliers prefer to step back. (€1 = $1.10)

UK/Spain

• The Davis Index weekly north and south UK HMS 1&2 (80:20) ferrous scrap indices declined by £14/mt ($17/mt) and £1/mt to £83/mt and £85/mt, respectively, delivered dockside on Tuesday.
• While UK dockside ferrous scrap prices for these grades averaging lower again this week, the lowest confirmed transactions for HMS 1&2 (80:20) rebounded from the £60/mt lows last week to around £65-75/mt this week – potentially forming a trough.
• The weekly indices for north and south UK OA (Plate & Structural) ferrous scrap fell by £15/mt and £13/mt to £108/mt and £110/mt, respectively, delivered dockside.
• Davis Index’s weekly north and south UK 5A/5C (frag feed) ferrous scrap indices dropped by £2/mt and £8/mt to £53/mt and £45/mt, respectively, over the same period.
• The weekly Davis Index for UK small bulk HMS 1&2 (80:20) and shredded were flat at €135/mt ($146/mt) fob and €140/mt fob, respectively, on Friday.
• UK-based small bulk exports have few realistic alternatives with the market becoming relatively illiquid following the closure of many European steel mills—particularly ferrous scrap-intensive electric arc furnaces—in a response to contain the spread of COVID-19.
• Davis Index’ weekly UK small bulk HMS 1&2 (80:20) and shredded ferrous scrap indices for northern Spain remained unchanged at €180/mt cfr and €185/mt cfr, respectively, as Spanish steel mills have only recently returned to seek offers from seaborne market.
• The Spanish government’s reclassification of the local steel industry as an essential and critical sector this week, was received by the market as positive news. The reclassification means, mills can legally resume commercial production and tender for scrap procurement.

Russia (March 30)

• The weekly Davis Index for HMS 1&2 (80:20) or A3 scrap in Russia’s Baltic Sea region significantly decreased by $30/mt to $170/mt fob on Monday, while the index in the Black Sea region decreased by $15/mt to $178/mt fob.
• One supplier from Rostov-on-Don sold A3 scrap for $220/mt cfr to Greece on March 27, but market participants don’t believe this price can be achieved again.
• There are currently four cargoes under loading in St Petersburg for Turkish buyers, but the prospect of further sales is unclear because COVID-19 has caused Russia to officially shut down for the week. Moreover, collection has been very slow.
• The weekly Davis Index for HMS 1&2 (80:20) or A3 scrap decreased by Rub1,200/mt ($15/mt) in St Petersburg dock to Rub12,700/mt delivered on Monday, March 30. One of the biggest exporters suspended collection because of Russia’s week-long shutdown. Another supplier is suspending collection beginning April 1. Some exporters are still trying to collect scrap because they require some tonnages to complete their cargoes.

USA (April 2) 

• The weekly Davis Index for basic pig iron (BPI) increased by $1/mt on Thursday from $323/mt cfr New Orleans to $324/mt cfr Nola. Ferrous markets are quiet, but some material is being offered around prior levels, with no confirmed sales.
• The index for nodular pig iron (NPI) imports was flat at $418/mt cfr Nola, with no new sales this week. 
• The weekly Davis Index for US hot briquetted iron (HBI) imports was flat at $254/mt cfr New Orleans. No HBI import deals to North America were reported this week, nor was the material reportedly moving to other locations.
• Prime scrap generation declined after automotive output was cut, leading to tightened prime supply. However, steel mills are running at reduced production levels and have lower requirements for prime, secondary, and alternative scrap grades, including BPI.
• Market participants anticipate BPI and alternative scrap prices to decline due to the significant downtrend, in ferrous scrap throughout March as well as ongoing global challenges.
• Steel mills have reduced buying programs for the April domestic ferrous scrap trade that typically kicks off at the beginning of every month.  There was no activity as of April 2. Market participants are still unsure of price movement ceilings but foresee a wide range of declines, anywhere from $30-100/gt, with variance based on region and grade.
• By the end of the week, some major bulk exporters temporarily stopped export activity at docks. (April 3 update)
• US East Coast dock collection prices for ferrous scrap remained unchanged on Tuesday, March 31, across all grades and dock locations amid muted industry activity, economic challenges, and global disruptions due to lockdowns by various governments.
• The weekly Davis Index for export yard buying prices in New York for HMS 1&2 (80:20) was flat at $138/gt delivered on Tuesday and remained at $148/gt delivered New York dock for P&S 5ft. The index for shredder feed was unchanged at $102/gt delivered.
• The pricing for HMS 1&2 (80:20) has decreased by around $85/gt since the beginning of March, depending on dock location and prior sale price. 

Japan

• Japanese ferrous scrap export prices fell by another JPY1000-1500/mt ($9-13/mt) due to continued drop in demand and rising COVID-19 cases in the country. Billet export prices dropped by $10-15/mt on lockdowns in Southeast Asian countries like Philippines, Malaysia and Vietnam.
• The weekly Davis Index for #2 HMS settled at JPY20,250/mt ($188/mt) fob Japan on Wednesday, down by JPY500/mt. By Friday, trades for #2 HMS concluded at JPY19,500-20,000/mt fob Japan before demand plunged due to a lockdown in Vietnam, Japan’s major trade partner.
• Offers for HS and busheling scrap in small bulk cargoes were in the range JPY22,500-23,000/mt fob Japan.
• The Japanese government is considering announcing a complete lockdown to control the rising spread of the virus. If imposed, traders could find it difficult to ship booked cargoes. Yards refrained from confirming new orders. Volatile Japanese Yen against US Dollar remained a concern as it was trading at 108.34 on April 4 against US Dollar from 107.92 a week ago. Prices fall in line on both fas and fob basis this week.
• Tokyo Steel held ferrous scrap purchase prices unchanged after decreasing them by JPY500/mt at all five works effective March 28. Prices for #2 HMS were at JPY17,500/mt ($163/mt) del Kyushu plant. While bids for #2 HMS in Utsunomiya, Tahara, Okayama and Takamatsu were at JPY19,000/mt, JPY20,000/mt, JPY18,500/mt and JPY17,500/mt, respectively. Bids for busheling were at JPY22,000/mt del Tahara and JPY21,000/mt del Utsunomiya.

Taiwan

• Taiwan’s steel production was lesser affected than other countries. The weekly Davis Index for containerised US-origin HMS 1&2 (80:20) settled at $206/mt cfr Taiwan on Thursday, down by $8/mt from the prior week. US-origin HMS 1&2 (80:20) concluded at $205-210/mt cfr Taiwan early in the week. Bids from steelmakers subsequently dropped to $200-203/mt cfr Taiwan by Friday following global cues.
• The weekly Davis Index for domestic HMS 1&2 (80:20) in south Taiwan settled at NT$6,150/mt ($203/mt) del plant Tuesday, down by NT$300/mt. The weekly index for HMS 1&2 (80:20) in north Taiwan settled at NT$6,350/mt del plant, down by NT$300/mt. Mills paid NT$6,000-6,200/mt for domestic HMS 1&2 (80:20) delivered in the south.
• Feng Hsin steel offered rebar G-40 at NT$14,000-14,200/mt ex producer but trades after discount were at $13,700-13,800/mt ex producer. On March 28, the steelmaker lowered these prices by an additional NT$300/mt.
• Japanese HMS 1&2 (50:50) in small bulk cargoes traded $210/mt cfr Taiwan by Friday, down $15-20/mt from the prior week against offers of $215-220/mt cfr Taiwan early this week. Japanese EAF makers offered billets at $395-400/mt cfr Taiwan with bids for the same at $360-370/mt cfr Taiwan.

Vietnam

• The Vietnam government announced 15-days lockdown until April 15 amid the COVID-19 pandemic. Major automakers including Toyota have announced production halts resulting in slowing down of demand this week. A force majeure was heard announced at Ho Chi Minh, a major port in the country.
• A southern mill booked Japanese bulk cargo comprising 9,000mt #2 HMS at $213/mt cfr Vietnam, down by $10-15/mt from the prior week. A northern mill booked 6000mt #2 HMS at $220/mt cfr Vietnam.
• After completion of a national lockdown, Hong Kong-origin suppliers resumed exports offers with HMS 1&2 (50:50) in bulk at $215-220/mt cfr Vietnam, down by $10-15/mt from the prior week. But mills were interested in $210/mt cfr, thus no trades materialised.
• Japanese HMS 1&2 (50:50) in small bulk cargoes was offered at $225-230/mt cfr Vietnam, with a few bids at $215-220/mt cfr Vietnam.
• In the domestic market, the weekly Davis Index for HMS 1&2 (80:20) delivered South Vietnam settled at VND5,300,000/mt ($224/mt) inclusive of taxes, down by VND250,000/mt, declined for the second week.

South Korea

• A South Korean mill booked a Russian A3 scrap bulk cargo at $210/mt cfr South Korea. 
• Trades for #2 HMS concluded at JPY20,000-20,500/mt fob Japan in early week. Bids subsequently dropped to JPY19,000-20,000/mt fob by Friday.
• The weekly Davis Index for US origin containerised HMS 1&2 (80:20) settled at $219/mt cfr South Korea on April 1, down by $9/mt from the prior Wednesday.
• Rising ferrous scrap inventories with major steel mills led to a drop in domestic ferrous scrap purchase prices of KRW10,000/mt. Effective from March 30, Hyundai cut prices by KRW10,000/mt taking heavy A at KRW260,000/mt and Light A at KRW225,000/mt del Pohang. YK steel lowered prices by KRW5,000/mt for all domestic scrap purchases. Other steelmakers, Welcome Steel, Dongkuk Steel and Daehan Steel have announced price cuts by KRW10,000/mt effective from April 1st, 2nd and 4th, respectively, according to Davis sources.
• The weekly Davis Index for domestic Heavy A del Incheon settled Tuesday at KRW252,500/mt ($206/mt), down by KRW10,000/mt. The Davis Index for Heavy A settled at KRW242,500/mt del Pohang, also down by KRW10,000/mt from the prior Tuesday. The weekly Davis Index for domestic Light A delivered Pohang plant settled at KRW227,500/mt, down by KRW7,500/mt from the prior week.

Indonesia

• Indonesian steel mills concluded thin trades as the prices dropped to match their bids. Some suppliers and traders were distressed to sell and liquidate after over $60-70/mt drop in just couple of weeks.
• A few mills scaled down their productions to match demand scenario amid weakening globally economy. 
• The weekly index for containerised shredded settled at $234/mt cfr Jakarta, down by $24/mt from the prior week and busheling scrap settled at $258/mt cfr Jakarta, down by $12/mt.
• The Davis Index for containerised HMS 1&2 (80:20) settled at $219/mt cfr Jakarta, down by $15/mt from the prior week. Offers of $220-225/mt from US suppliers were rejected by buyers.
• Domestic – An Indonesian mill traded 4sp billet at $375-380/mt cfr Southeast Asia, down by $5/mt from the prior Thursday. Domestic heavy melt scrap was priced at $218-220/mt del Indonesia mill, down by $15-17/mt from the prior week.

Thailand

• Thailand’s domestic scrap prices fell by over $40-50/mt in last two weeks period following global cues and subdued domestic steel demand. 
• The weekly Davis Index for domestic HMS 1&2 (80:20) delivered Rayong settled at THB7,750/mt ($236/mt) Tuesday, down THB550/mt ($17/mt) inclusive of taxes. Prices dropped further to THB7200-7300/mt ($218-221/mt) del Rayong late in the week.

Malaysia

• The production and mining activities were subdued amid lockdown announced by the government. 
• The weekly Davis Index for domestic HMS 1&2 (80:20) delivered western mills settled at MYR845/mt ($196/mt), unchanged from the prior week. The index for HMS 1&2 (80:20) delivered eastern mills dropped to MYR925/mt, inclusive of taxes, down MYR25/mt from the prior week.

China

• The weekly Davis Index for domestic HMS 1&2 (80:20) settled at CNY2,500/mt ($354/mt) inclusive of 13pc vat delivered to mill in eastern China. A few steel mills continued to lower their ferrous scrap purchase prices by CNY30-60/mt from the prior week following weakened HRC futures and drop in rebar prices.
• Chinese finished steel exporters struggling to book sales as global demand remains weak due to lockdowns in many countries, particularly in Southeast Asia. Steel production in China has picked up to pre COVID-19 outbreak levels. But production suspensions announced for steel downstream industries to contain the spread of the virus has posed a demand challenge.
• The purchasing managers’ index (PMI) for China’s manufacturing sector expanded to 52 in March from 35.7 in February according to the National Bureau of Statistics.
• China steelmakers have placed orders for billets. A Vietnamese steel mill offered 40,000mt billet at $380/mt fob Vietnam or $390/mt cfr China. The deal concluded at $380/mt cfr China for immediate shipment, down by $15-20/mt from the prior week. A few billet trades concluded at $375/mt cfr China for May shipments.
• With a drop in futures, Chinese mills offered HRC at $420-425/mt fob China early in the week. However, they failed to find buyers who opted for lower priced Indian-origin HRC at $395/mt cfr Vietnam. Global HRC prices have dropped by over $50-60/mt in last two weeks. Indian mills are looking to liquidate their inventories at lower prices as domestic steel demand is unlikely to recover before August. Vizag steel is heard to have sold 30,000mt of billets for May shipment at $355-356/mt fob India or $375-376/mt cfr China.

Pakistan

• With COVID cases surpassing 2,300 mark as on Friday, the government has decided to extend its lockdown period from April 6 to April 14. With this move, importers are likely to face detention and demurrage charges at Port Qasim and have sought the government’s support for a waiver.
• The weekly Davis Index for containerized shredded dropped by $20/mt to settle at $236/mt cfr Port Qasim on Friday. Early this week, trades for containerised shredded concluded at $235-240/mt cfr Qasim. Bids from buyers subsequently fell below $230/mt cfr Qasim. In the later, suppliers withdrew new offers citing a sharp decline in collection rates and operational difficulties.
• Domestic steel markets went silent as almost all furnaces have been shut completely and primary EAF makers lowered their production outputs to avoid inventory pile up. Ship breaking activities in Gadani market too shut amid concerns on labours safety.
• The weekly Davis Index for commercial Bala billet, G-60 settled flat at PKR87,500/mt and PKR93,250/mt ex-yards Punjab inclusive of local taxes. The Davis Index for G-60 rebar settled flat at PKR108,500/mt ex-plant Karachi and PKR107,500/mt ex-plant Punjab. Domestic scrap prices in Pakistan remained flat with medium grade scrap equivalent to shredded offered at PKR67,250/mt and mixed HMS and P&S at PKR66,500/mt ex-works.

Bangladesh

• A major steel mill in Chattogram booked 32,000mt bulk ferrous scrap cargo this week, with shredded at $250/mt cfr Chattogram and HMS 1&2 (80:20) at $245/mt cfr Chattogram, down $5/mt from the prior weeks’ offer levels for May shipment cargoes.
• The government has extended its national lockdown till April 11 which began on March 26, as the toll of COVID-19 cases cross 55 mark, and 14-day quarantines at Chattogram port and causing additional charges that to be paid amid logistics and labour concerns.
• In containers market, the Davis Index for containerized shredded scrap settled at $243/mt cfr Chattogram on Friday, down by $17/mt from the prior week. Traders were looking for Japanese bulk scrap cargoes as the prices have dropped significantly in step with global markets.
• Though many leading steel mills including BSRM, Abul Khair and GPH have continued regular operations, many medium and small-scale furnaces are operating at lowered capacities. Rebar steel manufactures kept sales offices closed during the lockdown on transport issues. GPH Ispat has postponed its testing and commencement of new quantum EAF.
• The Davis Index for domestic HMS 1&2 (80:20) and ship-breaking P&S scrap settled at BDT28,250/mt and BDT28,750/mt inclusive of local taxes ex-yard Chattogram on Friday, down by BDT250/mt ($3/mt) from the prior week.
• The Davis Index for large steelmakers rebar settled at BDT58,750/mt ex-producer, unchanged from the prior week.

India

• After almost all induction and EAF furnaces switched off production, Indian primary steel makers like Tata, SAIL and JSW too started idling their blast furnaces this week to curtail productions. Imported ferrous scrap market takes a pause, though traders pick up enquiries in the late week. Many contracts reported to have cancelled amid enough stocks in hand. Shipping lines accepted to waive off detention and demurrage at ports till April 14 offering relief to importers upto an extent.
• Steel mills eyed opportunities in the export markets despite heavy competition to liquidate semi finish and finished steel inventories.
• The weekly Davis Index for containerised shredded dropped by $20/mt to $238/mt cfr Nhava Sheva on Friday. Early this week, shredded in containers offered at $240-245/mt cfr Nhava Sheva but no buyers or traders were ready at those levels. In the absence of any major trades, the Davis Index for containerised P&S 5ft, Busheling and Turning settled at $245/mt, $250/mt and $208/mt cfr Nhava Sheva, down by $17-20/mt from the prior week.
• With a global pause in auto and manufacturing activities, scrap generation rate has taken a hit in supplier countries and is already pushing up offer prices. 
• The daily Davis Index for rebar in Raipur settled flat at Rs31,200/mt ($409.12/mt) ex-works amid the nationwide lockdown. The daily index for billet settled at Rs26,500/mt ($347.49/mt) ex-works Raipur, also flat.
• Most secondary steel producers have five to seven times the usual semi-finished steel inventories piled up as sales have come to a standstill. These mills are eager to sell their products in overseas markets and offered competitive prices.