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

A successive rise in domestic steel and scrap prices driven a gradual recovery in demand prompted some Indian steel mills to enquire for imported ferrous scrap. Mills have secured over 200,000mt of billet export orders in the last 10 days, which is boosting ferrous scrap demand. The wide gap between imported and domestic favoured the purchase of domestic scrap which is more cost-effective and almost halted seaborne scrap trade. 


The weekly Davis Index for cast iron, rotors, and drums, Wednesday, settled at $511/mt cfr Nhava Sheva, up by $9/mt from July 14. Offers increased by $10-15/mt to reach $515-520/mt cfr Nhava Sheva. A few trades for the grade reported at $500-505/mt cfr Mundra as buyers resumed imported scrap bookings on tightened domestic supply. Also, short supply at the exporter yards and container shortages reduced traders’ chances of procuring materials at lower prices.


In the domestic market, a sharp rise in ferrous scrap prices in the last couple of days boosted cast iron scrap offers in Mandi Govindgarh to Rs37,500-38,000/mt ($503-510/mt) delivered mills. The narrowing gap between imported and domestic could encourage imported scrap trades. 


The daily Davis Index for containerized shredded on Wednesday, settled unchanged at $536.25/mt cfr Nhava Sheva from Tuesday. Most traders kept offers for shredded firm around $540/mt cfr Nhava Sheva against bids of $530-535/mt cfr Nhava Sheva. 


The daily Davis Index for UAE-origin HMS 1&2 (80:20) dropped amid low bids to $470/mt cfr Nhava Sheva, down $5/mt. 


In absence of imported offers, the domestic scrap market got a boost. In Alang’s shipbreaking market, melting scrap prices stabilized on Wednesday after an uptrend. Trades heard at Rs35,900-36,000/mt ex-yards. The price for imported HMS offered at $465-470/mt cfr Nhava Sheva translates to above $480-485/mt with handling and local transportation charges on a delivered mill basis. A gap of over $25/mt between domestic and imported scrap makes the latter expensive for many secondary buyers in India. 


Demand for finished long steel and consequently imported scrap is expected to recover in the next couple of weeks once the peak of the monsoon season passes. In Mumbai, rebar offers unchanged at Rs48,100/mt ex-works on Wednesday. In Mandi Gobindgarh, ingot traded above Rs45,500/mt ex-works. 


In line with domestic fundamentals, Indian mills kept billet export offers above $625-630/mt fob. Amid production cuts and strict monitoring by authorities, Chinese buyers are expected to continue billets imports from India. 


Rainstorms in China’s Henan province created a sort of confusion about supply-demand balance among market participants. Chinese iron ore futures dropped by around 4pc to CNY1,175/mt ($181.53/mt) in the closing session. International iron ore Fe 62pc in the spot market is expected to drop below $215/mt cfr North China on Wednesday. Shagang steel announced a price hike for rebar by CNY250/mt for late July deliveries. Domestic billet prices flat on Wednesday at CNY5,180/mt ex-Tangshan inclusive of VAT. 



The daily Davis Index for containerized shredded settled at $540.59/mt cfr Indian subcontinent, settled unchanged; while the daily Davis Index for containerized US-origin HMS 1&2 (80:20) settled at $497.47/mt cfr Indian subcontinent, down $1.78/mt. 


On Wednesday, no trades for imported shredded were reported in South Asia as all three major markets remained shut on account of Eid-al-Adha. 


($1=Rs74.59; CNY6.47)

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