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

Imported ferrous scrap offers shot up by $25-30/mt this week on global cues. Although mills resisted high offers, those with limited inventories had no option but to accept high offers to keep operations running. There were very limited offers for Asian markets as most suppliers focus on Turkish bulk demand.  


The Davis Index for containerized shredded, Friday, gained $8.5/mt from Thursday and $27.43/mt from Dec 4 to settle at $413.5/mt cfr Port Qasim. There were very limited trades above $405-410/mt cfr Qasim as buyers decided to step back. Offers, on the other hand, were in the range $415-420/mt cfr Qasim on Friday. With indications of trades likely to materialise during the weekend or early next week.


There is an acute shortage of HMS scrap in the market. The Davis Index for UAE-origin HMS 1&2 (80:20) settled, Friday, at $393/mt cfr Port Qasim, up $6/mt from Thursday and up $25/mt from a week ago. Mills preferred shredded over HMS scrap to avoid paying extra taxes imposed on the imports of the latter. Trades from Dubai thinned amid active Indian demand, but most traders held their material to make the best of the bull run. Indications for containerized Dubai-origin mixed #1 HMS and P&S sarya scrap were around $395-400/mt cfr Port Qasim on Friday.  


The index for US-origin HMS 1&2 (80:20), Friday, settled at $392.14/mt cfr Port Qasim, up $8.14/mt from a day prior and gaining $23.39/mt from a week earlier. Most European suppliers were in the mood to shut yards or cut operating hours ahead of schedule winter holidays.  


The weekly Davis Indexes for P&S and #1 busheling settled at $408/mt and $420/mt cfr Port Qasim, up by $18/mt and $20/mt, respectively. Inquiries for other premium grades of scrap resumed this week to offset the shortage of shredded. Cast iron, rotor, and drums from the US were offered at $415-420/mt cfr Pakistan, higher by $20/mt from the prior week.  


In the absence of South African suppliers, subcontinental buyers are competing to secure material from Australia, New Zealand, and South American sellers; with Bangladeshi buyers placing the highest bids.    


Rebar prices high, trades slow

In the domestic market, Bala billet prices were at PKR92,500-94,000/mt ($580-594/mt) ex-works Punjab. The Davis Index for G-60 billet settled at PKR99,750/mt ex-works Punjab, up PKR750/mt from Dec 4.  

The weekly Davis Index for G-60 rebar rose PKR2,750/mt to PKR117,750/mt ex-works Karachi. While the same rose to PKR116,143/mt ex-works Punjab, up PKR2,143/mt from the prior week. A major mill in the South hiked rebar prices by PKR3,000/mt ($19/mt) effective Dec 10. Prices were revised to PKR122,000-123,000/mt ($762-768/mt) ex-works. Rebar makers continued to lift offers despite slow demand to pass on the increased input cost to end-users, despite weak demand.


Pakistan Association of Large Steel Producers (PALSP) and Association of Builders and Developers of Pakistan ABAD opined that steel constitutes 40pc of the total cost of material in high-rise buildings while in residential units the range is 20-25pc. With a price increase of PKR2,000-3,000/mt, the cost of steel has risen by almost 1.5-2pc for a house, which could hurt business sentiments of the construction sector, according to ABAD.


Domestic scrap

Despite rising prices, steel demand remains unsupportive of production ramps. Many mills could also cut production in winter.  

The index for Art Q toke scrap equivalent to a mix of HMS and P&S jumped PKR714/mt to PKR73,214/mt ex-yard Lahore, Friday, from late last week. The weekly index for Pure Q Toke (shredded) too rose PKR1,021/mt to PKR75,021/mt, ex-yards in line with rising imported scrap prices. Domestic ferrous scrap prices in Pakistan rose on bullish global cues. For shipbreakers, offers for scrapped tankers heard at $420-440/ldt cfr Pakistan this week, up $20-40/ldt from the prior week.  




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