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

Indian mills sought imported scrap, albeit in limited quantities, amid tightening domestic scrap supply. Demand, however, has started to come under pressure on Wednesday, with the rising COVID-19 tally dampening sentiment. A depreciation of 1.5pc in a day to Rs74.55 against $1 on April 7, dented demand for imported scrap further. Indian currency fell to a four-month low, recording the steepest one-day drop seen since August 2019.

The government has tightened social distancing restrictions including, night curfews, weekend lockdowns, especially in states like Maharashtra, Gujarat, Punjab, Chhattisgarh, and Tamil Nadu, where consumption of ferrous scrap comparatively higher than other states. Buyers have thus started to resist current offer levels amid fear of economic activities dipping due to tightened restrictions. In the global market, however, steel prices are charting new highs and could move further amid production curbs in China. 


The weekly Davis Index for cast iron, rotors, and drums, Wednesday, settled at $458/mt cfr Nhava Sheva, up by $8/mt. Deals for cast iron rotor drums were in the range of $455-460/mt cfr Mundra. Offers on Wednesday were above $460-465/mt cfr Nhava Sheva amid elevated container freight rates. 

The daily Davis Index for UAE-origin HMS 1&2 (80:20), Wednesday, settled at $427/cfr Nhava Sheva, up by $1/mt. Dubai-origin HMS #1 traded at $435/mt cfr Nhava Sheva, with offers at $440/mt cfr Nhava Sheva. All three subcontinental markets competed to secure material from the region where supply is known to tighten during the Ramadan festival. From West Africa, HMS scrap with CI-GI traded at $395-400/mt cfr Nhava Sheva. 


Offers for shredded in containers from the UK or Germany were above $460/mt cfr Nhava Sheva hitting a one-month high. Most suppliers preferred to sell shredded in Pakistan where mills are paying $5-10/mt higher than Indian buyers. The Davis Index for containerized shredded settled at $457.5/mt cfr Nhava Sheva, up by $2.5/mt from Tuesday following resumption of bulk bookings in Turkey at increased prices. 


The index for US-origin HMS 1&2 (80:20) Wednesday settled at $427.5/mt cfr Nhava Sheva, inched up by $1.25/mt from a day prior. Offers for HMS 1&2 (80:20) from the UK and Australia were at $425-430/mt cfr Nhava Sheva. A shortage of chips has forced many auto plants to shut down, lowering the availability of prime grades and widening the gap between busheling and HMS. 


On Wednesday, melting scrap offers in Alang dropped by Rs200-300/mt to Rs32,400-32,500/mt ex-yards. The spread of COVID-19 has forced workers to curtail working hours. In Mumbai, rebar prices were unchanged at Rs48,100/mt ex-works. 

Ingot prices in the Mandi Govindgarh, however, lost steam after reaching a record high of Rs44,500/mt ex-works and dropped to Rs43,100-43,300/mt ex-works on Wednesday. These domestic fundamentals have dampened the sentiment for ferrous scrap bookings.


In China, mills expect steel prices to continue their upward movement. Despite production curbs in Tangshan, iron ore prices jumped by $3-4/mt after the Qingming holidays. Spot imported iron ore 62pc ferrous content prices were above $170.85/mt cfr North China on Tuesday with a possibility of further rise in the coming days. Domestic billet prices rose further by CNY40/mt to CNY5,060/mt ($770/mt) ex-Tangshan, including 13pc VAT. 


In Southeast Asia, deals for non-ASEAN-origin billets were at $645-650/mt cfr China, with offers subsequently rising to $655-660/mt cfr China. Chinese traders booked around 50,000mt of 3sp billets at $660/mt cfr China. These included 20,000mt from Indonesia and 30,000mt from Malaysia. Prices rose by $20-25/mt from late last week, with a further upward movement likely in the coming days. Thus Indian mills also focused on exports.



The daily Davis Index for containerized shredded Wednesday settled at $449.69/mt cfr Indian subcontinent, up by $2.93/mt from a day prior; while that for containerized US-origin HMS 1&2 (80:20) was at $421.69/mt cfr Indian subcontinent, up by $0.93/mt from Tuesday. 




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