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

Pakistani imported ferrous scrap prices continued to trend up. Prices increased amid a shortage of containers, approaching winter and a national lockdown due to a second wave COVID-19 infections, all of which could lead to a short supply of scrap at yards in the next few days. Most offers from the EU and UK Thursday were at $340-345/mt cfr Port Qasim, reaching a 20-month peak.   


In Turkey, mills resumed buying imported scrap at prices $10/mt higher than the prior week. Strong demand for rebar in the export market indicated a possibility of a further rise in scrap prices. Bullish Turkish market also pushed up offers for South Asian markets.


In Pakistan, although mega infrastructure projects have resumed, the pace of work is slow and rebar prices have remained flat for over a month-and-half. But with sellers refusing to lower offers, importers finally accepted higher levels this week. Yards with supply could sell off materials aggressively in early December to end the year with high profits.  


The Davis Index for containerized shredded, Thursday, inched up by $0.33/mt to $339.71/mt cfr Port Qasim. Prices rose by over $10/mt from last Friday. Buyers took a short pause on Thursday after buying several containers of EU and UK-origin shredded at $338-342/mt cfr Port Qasim. Most mills showed a bit of resistance to buy above $340/mt cfr Qasim as finished steel demand in the country continues to remain subdued. On Thursday, most offers from Europe rose to $340-345/mt cfr Port Qasim, a 20-month peak. Buyers, however, were interested in $335-338/mt cfr Port Qasim levels. For usuance 150 days, a deal reported even at $345/mt cfr Qasim.


Short supply of HMS scrap too pushed prices up this week. The Davis Index for UAE-origin HMS 1&2 (80:20) settled at $328/mt cfr Port Qasim, up by $1/mt from Wednesday. Mills preferred shredded over HMS scrap to avoid paying extra taxes imposed on the imports of the latter. Offers for containerized Dubai-origin mixed #1 HMS and P&S sarya scrap were at $330-333/mt cfr Port Qasim, with no buyers.  


The index for US-origin HMS 1&2 (80:20) settled at $325.42/mt cfr Port Qasim, up by $0.42/mt from Wednesday. Offers for the grade from the US and UK were at prices above $325/mt cfr Port Qasim against bids of $320/mt or lesser cfr Port Qasim. Offers from South American suppliers for HMS 1&2 (80:20) were at $315-320/mt cfr Qasim.  


The weekly Davis Indexes for P&S and #1 busheling settled at $340/mt and $355/mt cfr Port Qasim, up by $7/mt and $11/mt, respectively. Trades for premium grades scrap also increased over this week as supplies are expected to thin in the next few days. Trades for motors scrap were reported at $750-780/mt cfr Pakistan. While cast rotor drums offered at $360/mt cfr Qasim.


Domestic steel  

With a reduction in power tariffs announced by the government, Pakistan steel mills could lower their offers for rebar supported by a decline in input costs. In the domestic market, Bala billet prices were at PKR91,000-91,500/mt ($575-578/mt) ex-works Punjab, unchanged from the prior week amid recovering demand. The Davis Index for G-60 billet settled at PKR96,000/mt ex-works Punjab, unchanged for over one and a half months period. Availability of rerolling scrap for billet makers remains good as the ship breaking market in the country witnessed a revival with some heavy tonnages bought recently.  


The weekly Davis Index for G-60 rebar settled flat at PKR109,500/mt ex-works Karachi. In Punjab, G-60 rebar prices were at PKR108,000-108,500/mt ex-works, unchanged from the prior week. After staying firm early in the week, few mills offered rebar at discount to match buyers’ expectations amid cash crunch. Pakistani currency continued to appreciate falling below PKR159 against the US dollar for the first time in the last five months, which could aid imports.  


Domestic scrap

In the northern region, the local government has imposed restrictions on some secondary rolling mills and furnaces, especially those without smog or carbon emission control machinery. Mills are directed to pause production for a few weeks to control heavy smog. The cost of bricks used in the construction thus has increased by over 30pc from Rs9 to Rs13 per brick, which could further delay construction activities in the country. The index for Pure Q toke scrap equivalent to shredded was flat at PKR69,000/mt ex-works Lahore, Friday, from late last week. The weekly index for Pure Q Toke (shredded) too remained stable at PKR70,000/mt ex-works in line with higher imported scrap prices.  




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