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

Imported shredded scrap prices in India continued to be under pressure despite a recovery in demand. Inquiries for imported scrap increased on Thursday amid high domestic scrap and limited availability. Indian buyers refrained from trades since finished steel demand has failed to pick up. Demand in the auto sector, however, is on the mend, the only positive amid weak domestic fundamentals which is keeping HRC prices high. Another cause of concern was slowing imports from China.  

 

The Davis Index for US-origin HMS 1&2 (80:20) in bulk Thursday dropped by $0.5/mt cfr Turkey from Tuesday. Turkish mills have started targeting $295/mt cfr Turkey for US-origin HMS 1&2 (80:20) while marginally reducing offers for rebar to the US market. 

 

The daily Davis Index for containerized shredded settled at $318.67/mt cfr Nhava Sheva, down marginally by $0.58/mt from Wednesday. Bids for shredded were firm at $315-317/mt cfr Nhava Sheva with most suppliers resisting these levels. Indian buyers are unlikely to book material if prices do not decrease. But yards and traders believe a steep drop in prices is less likely and thus a few suppliers kept offers for containerized shredded at $320-323/mt cfr Nhava Sheva and Mundra citing that levels as ‘workable’.  

 

The Davis Index for HMS 1&2 (80:20) of UAE-origin settled at $305/mt cfr Nhava Sheva, Thursday, down $2/mt from Wednesday. Deals for Dubai-origin HMS 1&2 (80:20) were at $300-305/mt cfr Nhava Sheva. Mills’ bids, however, dropped in the range $295-300/mt cfr Nhava Sheva on Thursday. Scrap grade #1 HMS from Dubai traded at $307-308/mt cfr Nhava Sheva against prior offers of $310-315/mt cfr Nhava Sheva.  

 

A few buyers stayed away from importing from the UAE, with the government extending the ban on exports of steel scrap by another four months till Jan 2021. Many suppliers have managed to export despite the ban. Of late, however, UAE’s exports have dipped due to weak demand in the Indian subcontinent.  

 

The index for US-origin HMS 1&2 (80:20) settled at $305/mt cfr Nhava Sheva, down by $2/mt from Wednesday. The collection prices in the domestic market in US remain high lending support to higher prices. Indian buyers were not keen on booking material from the US, which take at least two months to arrive compared to a delivery period of 10 days from Dubai.  

 

UK-origin scrap suppliers offered slightly lower than earlier levels. Brazilian yards offered HMS 1&2 (80:20) at $5-8/mt Thursday following lowering interest in the markets. A few trades for HMS 1&2 (80:20) from Australia and Brazil were reported at $295-300/mt cfr Nhava Sheva.

 

The recent arrival of bulk cargo at Kandla with 33,000mt ferrous scrap will ease inventory pressure for a few mills. In the bulk market, offers from the US West Coast were heard at $330/mt cfr Kandla, however, mills were unwilling to raise their bids over $300/mt cfr Kandla. Bulk sellers are maintaining higher prices due to tight availability, high domestic demand, high collection cost etc, said a bulk offering trader on Thursday. 

 

In the domestic market, weak demand and limited construction activity pressured scrap prices. Barring major steel producers, most mills are still operating at 60-80pc capacity. Small and medium-scale electric arc and induction furnaces are struggling to find a foothold in the competitive market. Amid pressure on their profits and strained cash flow, mills are waiting for prices to drop before restocking scrap.

 

Shortage of industrial oxygen has caused many small steel mills to temporarily suspend their operations while overall soft sentiments keep domestic scrap and rebar prices under pressure.  

 

In the export market, China has slowed down imports while Philippine in SE Asia was only the leading supplier active in the market paying $450/mt cfr Philippines for Indian billets. Mills were targeting $430/mt fob levels but failed to close deals.

    

Subcontinent

The Davis Index for containerized shredded, Thursday, settled at $311.22/mt cfr India subcontinent, down by $0.93/mt from Wednesday. The daily Davis Index for containerized US-origin HMS 1&2 (80:20) settled at $296.81/mt cfr India subcontinental, down by $2.90/mt. Prolonged weak finished steel demand weighed down indices on Thursday.  

 

($1=Rs73.68)

 

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