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

Japanese ferrous scrap export prices fell by JPY500-1,000/mt ($5-9/mt) for a fifth successive week. The Japanese government has announced a state of emergency in the majority of areas to contain the COVID-19 outbreak in the country. Firms have asked their employees to work from home and scrap collection rate has been hampered significantly.

Automakers had already announced operation suspensions at many plants. Steelmakers like Nippon and JFE are now mulling to idle their blast furnaces in absence of end-user demand in the market.

Buying inquiries for bulk from Vietnam and South Korea remained very limited. Market participants are unsure about the timeframe for the steel and ferrous scrap markets to normalise. 

The weekly Davis Index for #2 HMS settled at JPY19,250/mt ($179/mt) fob Japan on Wednesday, down by JPY1,000/mt. Trades with buyers in South Korea, Vietnam and Taiwan for #2 HMS concluded at JPY19,000-19,500/mt fob Japan.

A South Korean steelmaker booked a bulk comprising #2 HMS at JPY19,500/mt fob Japan, down from JPY20,000-20,500/mt fob early last week. The Davis Index for busheling settled at JPY22,500/mt ($212/mt) fob Japan, down by JPY250/mt from the prior Wednesday.

The Davis Index for Japanese HMS 1&2 (50:50) in small bulk cargoes settled at $211/mt cfr Taiwan, down by $12/mt from the prior Wednesday. Mills booked HMS 1&2 (50:50) in small bulk cargoes at $210/mt cfr Taiwan. On Wednesday, offers, however, rose to $215/mt cfr Taiwan with expectations of upward movement in global ferrous scrap.

Japanese HMS 1&2 (50:50) in small bulk cargoes was offered at $220/mt cfr Vietnam but a few bids were at $215/mt cfr Vietnam. The index for HMS 1&2 (50:50) settled at $216/mt cfr Vietnam, down by $11/mt from the prior week. Offers for HS and busheling scrap in small bulk cargoes were at $250-255/mt cfr Vietnam, with no takers.

Japanese yards offered #2 HMS at JPY19,500-20,000/mt fas Tokyo bay with its index settling at JPY19,500/mt fas Tokyo bay, unchanged from the prior week. The Davis Index for HS and shredded scrap settled unchanged at JPY22,250/mt and JPY22,000/mt fas Japan, respectively. Japanese yen depreciated to JPY108.85 against US$1 on Wednesday from JPY107.30 in the prior week.

Japanese domestic scrap prices flat on subdued demand 

Japan’s domestic scrap prices have remained flat since March 28, while export prices continued to fall. Tokyo Steel held its bids for #2 HMS at JPY17,500/mt ($160/mt) del Kyushu plant while #2 HMS bids del Utsunomiya, Tahara, Okayama and Takamatsu were at JPY19,000/mt, JPY20,000/mt, JPY18,500/mt and JPY17,500/mt, respectively. Bids for busheling were at JPY22,000/mt del Tahara and JPY21,000/mt del Utsunomiya plants.

Crude steel output to drop below 20mn mt in Q2 2020 

Due to a sharp decline in demand from three major consuming sectors, construction, automobile and shipbuilding, Japanese crude steel output is unlikely to exceed the targeted 20mn mt mark in Q2 2020, according to the Japanese steel industry association. 

Japan shipbuilding association had projected that its shipbuilding consumption of steel would be 3mn mt in 2020. But these estimates took a hit due to the COVID-19 outbreak.



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