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

Indian mills sought imported scrap, albeit in limited quantities, amid tightening domestic supply. Demand is, however, dented with the rise in COVID-19 infections. Migrant labourers are returning to their hometowns amid fear of stricter restrictions to control the virus in the coming days.


Buyers are resisting high offers fearing the possibility of a slowdown in economic activities due to the lockdown. Indian rupee remained depreciated at Rs74.55 against the US dollar lowering buying appetite. 


In the global market, however, steel prices are charting new highs and could move further amid production curbs in China. Flat steel prices in India hit an all-time high amid price hike announced by leading primary mills like JSW, Tata Steel, JSPL, Sail and AM/NS in April, ranging from Rs4,000-5,500/mt ($54-73/mt) on bullish auto demand and widened the gap between domestic and international prices. 


The daily Davis Index for UAE-origin HMS 1&2 (80:20), Thursday, settled at $428/cfr Nhava Sheva, up by $1/mt. Dubai-origin HMS #1 traded at $435/mt cfr Nhava Sheva, while some offers heard at $440/mt cfr Nhava Sheva. All three subcontinental markets competed to secure material from the region where supply is known to tighten during Ramadan. 


Offers for shredded in containers from the UK or Germany were above $460-465/mt cfr Nhava Sheva hitting a one-month high. High offers pushed the Davis Index for containerized shredded to $459/mt cfr Nhava Sheva, up by $1.5/mt from Wednesday. Trades for shredded remained paused and are expected in the coming days with a rise in inquiries on Thursday. Following the resumption of bulk bookings in Turkey at prices higher by $6-7/mt from prior deals, suppliers could raise offers to South Asia. 


The index for US-origin HMS 1&2 (80:20) Thursday settled at $430/mt cfr Nhava Sheva up $2.50/mt from a day prior. Around 1,000mt UK-origin HMS #1 in containers was sold to Chennai-based steelmaker at $433/mt cfr Chennai taking the index for HMS 1&2 (80:20) to $428/mt cfr Chennai on Thursday.


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. Offers for busheling were above $485-490/mt cfr Nhava Sheva. 


On Thursday, melting scrap offers in Alang remained stable at Rs32,400-32,500/mt ex-yards. The spread of COVID-19 has forced workers to curtail operating hours. Yards are also challenged by a shortage of oxygen cylinders used for cutting operations due to the diversion of industrial oxygen for the treatment of COVID patients. In Mumbai, rebar prices were unchanged at Rs48,100/mt ex-works since Tuesday. Prices for finished steel are expected to rise amid a huge gap between domestic and international prices amid high raw material prices.


Ingot prices in 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. 


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 reached above $173/mt cfr North China on Wednesday with a possibility of further rise in the coming days. Domestic billet prices remained unchanged at CNY5,060/mt ($770/mt) ex-Tangshan, including 13pc VAT. Supportive steel prices pushed steel scrap in China up by CNY30-50/mt. 


In Southeast Asia, deals for non-ASEAN-origin billets were at $650/mt cfr China, with offers subsequently rising to $660-670/mt cfr China. Indian mills also focused on exports, offering billets at $610-615/mt fob India amid depreciation of the Indian rupee to a 4-months low against the dollar. 



The daily Davis Index for containerized shredded Thursday settled at $451.03/mt cfr Indian subcontinent, up by $1.33/mt from a day prior; while that for containerized US-origin HMS 1&2 (80:20) was at $424.26/mt cfr Indian subcontinent, up by $2.57/mt from Wednesday.



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