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

Sluggish finished steel demand in Asian markets pressured importers to further reduce bids for Japanese ferrous scrap by JPY1,200-1500/mt ($11-14/mt) this week. Steel demand is weak amid renewed lockdowns and nearing of Lunar New Year holidays. Domestic ferrous scrap prices also declined this week with Tokyo Steel reducing prices on Tuesday. Tokyo Steel lowered #2 HMS purchase prices by JPY500/mt to JPY38,000/mt del plant Tahara and JPY1,000/mt to other three steel plants while bids to Utsunomiya remained flat, effective Feb 3. Amid power shortage and reduction in steel demand in Japan, prices are expected to fall further this week as South Korean and Taiwanese mills are heard negotiating at lower levels.


Traders focused on exports to reduce inventory as power shortage throughout the week forced production cuts in many industries including steel. Offers to Chinese mills fell by $50/mt from the prior week to $400-405/mt cfr Shanghai on Wednesday, with no trades heard. Bids at $395/mt. Sellers are cautious of exporting to China due to delays at ports caused by documentation and quality issues in previous Japanese scrap shipments amid new grading standards implemented by Chinese authorities.


Bids might fall further as holidays are just around the corner and prices of other raw materials like iron ore have also declined, said exporters. Iron ore prices fell by $16/mt this week to $149.8/mt. Chinese HRC manufacturers were cautious of a possible cut in rebates to 8-9pc from 13pc to curb steel output, which is expected to further pressure raw material prices in China.


The index for P&S 5ft (small bulk) China port settled at $401/mt cfr down $50/mt from the prior week. The weekly Davis Index for Japanese #2 HMS fell by JPY1,200/mt to JPY33,500/mt ($319/mt) fas, while the index for the grade on fob basis fell by JPY1,250/mt to JPY35,250/mt fob Japan with prices unchanged from the prior Thursday after Hyundai bid JPY35,000/mt fob.


Bids for Japanese #1 busheling (Shindachi) fell by JPY1,350/mt to JPY38,750/mt fob from a week ago. The weekly index for the grade fell by JPY1,225/mt at JPY37,250/mt fas Japan. South Korean Hyundai steel purchased 30,000 mt bulk scrap from Russia at $391/mt cfr and 45,000 mt of mix grades from the US at $398/mt cfr for March shipments. Traders anticipate further fall in Japanese export prices. With Turkish mills delaying scrap buying and the index down by $13/mt on Tuesday from Jan 27, Asian importers prefer to wait till the end of holidays.


The weekly Davis Index for HS and shredded, Wednesday, fell by JPY1,550/mt and JPY1,375/mt to JPY36,250/mt fas, respectively. Bids for HS and shredded heard at JPY36,500/mt fas, down by JPY1,000/mt from the prior week.


Offers for HMS 1&2 (50:50) fell $30-35/mt to $370-375/mt cfr Vietnam this week, and the index for the grade fell by $30/mt to $378/mt cfr Haiphong. Buyers resisted offers and were cautious of falling prices.


In Taiwan, the index for Japanese HMS 1&2 (50:50) fell by $33/mt to $368/mt cfr on offers declining to $370/mt cfr on Wednesday, down by $30-35/mt.


Buyers from Vietnam, Korea and Taiwan have either paused trades or continue to negotiate with Japanese exporters amid a bearish sentiment in Asian ferrous scrap markets. The decline in Japanese scrap prices could be short-lived, opined few market participants, as they expect prices to rise in February amid a global shortage of scrap and increased finished steel demand after Chinese Lunar New Year holidays.



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