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

Pakistani ferrous scrap prices were mixed this week after a two-week drop. A couple of bulk deals in Turkey gave a boost to scrap enquiries. Few deals were reported at slightly higher prices early this week but most major mills stayed away from purchases as domestic steel demand continued to lag. 


In October, mills could book aggressively on an expected recovery in long and flat steel demand from the construction and automotive sectors. 


The Davis Index for containerized shredded, Thursday, settled at $309.12/mt cfr Port Qasim, down by $3/mt from Wednesday. Prices showed a slight uptick early this week but dropped again on Thursday on weak domestic demand. A few containerized shredded scrap deals were reported at $310-312/mt cfr Port Qasim supplied from UK/Europe yards Thursday. Secondary steelmakers bid for the grade at $305/mt cfr Port Qasim. Market opinions were divided about future price trends with indications of softening prices in the next week. 

With the possibility of the Turkish lira to record lows, it is expected that prices could show a drop of another $5-7/mt next week in the bulk cargo bookings. This has pushed buyers to eye $300/mt cfr Port Qasim for shredded scrap.


Coinciding with a drop in buying interest from India, HMS scrap prices in Pakistan dropped this week. The Davis Index for UAE-origin HMS 1&2 (80:20) settled at $286/mt cfr Port Qasim on Thursday, down $3/mt from a day ago. Buyers lowered their bids for HMS 1&2 (80:20) to $285-287/mt cfr Port Qasim. Trades for UAE-origin mixed #1 HMS and P&S sarya scrap were reported at $292-295/mt cfr Port Qasim on Thursday. 


Pakistani government is likely to announce measures to aid steel industry’s recover from the COVID-19 pandemic, following which the appetite for ferrous scrap could recover around mid-October. Long holidays for Golden week in China would pressure prices further. The possibility of finished flat steel sales into Pakistant, especially HRC from China, at $515-520/mt cfr Port Qasim have dampened market sentiment. Scrap buyers are expected to stayed away from bookings over the next weeks to limit their risk exposure. Improving demand from the auto industry had earlier held importers to restock HRC from China at lower prices.


Pakistan’s Agha Steel Industries (ASI) has signed MOU with a local wire rod manufacturer, Horizon steel for the supply of refined low-carbon billet. It will supply 100,000mt of low-carbon billets worth approximately PKR10.5bn ($63mn) this year. The secondary downstream industry relies heavily on expensive imported raw material. However, in the coming days rising local production will result in import substitution. 


The index for US-origin HMS 1&2 (80:20) settled at $287.21/mt cfr Port Qasim, down around by $3/mt from Wednesday. Most US-based yards were unwilling to offer large volumes citing expectations of a stronger market in October. Offers were at $290/mt cfr Port Qasim against bids of $283-285/mt cfr on Thursday. 

The weekly Davis Index for HMS 1&2 (80:20) from the UK/Europe settled at $288/mt cfr Port Qasim, down by $7/mt. With most buyers bidding at prices $10/mt below the offer levels, some UK yards were forced to ease offers. 


The index for Latin American HMS 1&2 (80:20) settled at $283/mt cfr Port Qasim, down by $4/mt from the prior week. Brazilian traders lowered their prices to close a few deals while many still prefer offering into their domestic market. 

The weekly Davis Indexes for P&S and busheling settled at $313/mt and $332/mt cfr Port Qasim, down by $5/mt and $2/mt, respectively. Most traders stayed away from deals of heavy grade scrap. Bids for P&S scrap dropped to $310/mt cfr Port Qasim from Brazil and UAE following the decline in prices for shredded. 


Domestic steel 

Domestic steel prices in Pakistan failed to lift for another week as demand continues to lag. However, finished steel sales are expected to increase towards mid-September on improving demand. Hopes of demand recovery driven by infra projects initiated by the government in North Pakistan could lift trades next week. 


The weekly Davis Index for commercial Bala billet, Thursday, settled at PKR91,125/mt ($551/mt) ex-works Punjab inclusive of local taxes, down PKR125/mt from the prior week. Trades concluded at PKR91,000-91,200/mt ex-works over this week. The Davis Index for G-60 billet settled at PKR96,375/mt ex-works Punjab, down by PKR125/mt from the prior week. 


The weekly Davis Index for G-60 rebar settled flat at PKR109,000/mt ($659/mt) ex-works Karachi, stable from last week. Demand for rebar has slightly improved as monsoon has subsided in many regions. In Punjab, G-60 rebar prices were PKR109,5000/mt ex-works, declining by PKR500/mt amid subdued demand.


Domestic scrap

Mixed sentiments in the imported scrap market reduced domestic scrap trades in Pakistan. Prices were largely flat this week amid thin trades. Pure Q toke scrap equivalent to shredded traded at PKR70,500/mt ex-yard Lahore, Thursday, flat from late last week. The weekly index for Pure Q Toke (shredded) rose by PKR250/mt to PKR71,250/mt ex-Pakistan yard on Thursday. 


Demand for ferrous scrap is likely to improve in Pakistan next week as the market resumes consumption post the month-end financial blues. 




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