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

Imported ferrous scrap bookings in Pakistan, this week, were slow as finished steel demand remains under pressure. Mills are thus resorting to a just-in-time strategy to manage their inventories. In November, imported scrap prices have increased by $40-50/mt following global cues. Amid indications of a supply crunch, mills are expected to resume inquires next week.  


The Davis Index for containerized shredded, Friday, gained $1.69/mt and $8.39/mt from Nov 20 to settle at $369.82/mt cfr Port Qasim. A few trades for containerized EU and UK-origin shredded were at $367-370/mt cfr Port Qasim. Most US suppliers stayed away from the market due to depleting stocks along with the Thanksgiving holidays. Collection rates could drop in the coming days due to seasonal issues. A few shredded offers were at $375/mt cfr Port Qasim on Friday, hitting a 28-month high. 


The Davis Index for UAE-origin HMS 1&2 (80:20) settled, Friday, at $359/mt cfr Port Qasim, up by $3/mt from Thursday and by $15/mt from a week ago. Mills preferred shredded over HMS scrap to avoid paying extra taxes imposed on the imports of the latter. Trades for containerized Dubai-origin mixed #1 HMS and P&S sarya scrap were in the range of $360-365/mt cfr Port Qasim. 


The index for US-origin HMS 1&2 (80:20), Friday, settled at $354.64/mt cfr Port Qasim, up by $12.41/mt from Nov 20. 

Most European supplier countries are under lockdown due to the rising tally of COVID-19 infections, hampering logistics. Amid this second wave, some shipping lines have either canceled orders or deferred scheduled deliveries due to container shortage. 


In Pakistan, although mega infrastructure projects have resumed, the pace of work is slow and rebar demand has remained flat for over a month-and-half. Yards could hold back inventory to sell material at increased prices in early December. 


The weekly Davis Indexes for P&S and #1 busheling settled at $372/mt and $390/mt cfr Port Qasim, up by $12/mt and $20/mt, respectively. Trades 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 prices which were up by $15-20/mt from the week earlier.  


There were no offers from South African suppliers as their International Trade Administration Commission has decided to ban ferrous scrap exports to support the domestic industry. Subcontinental buyers were thus competing to secure material from Australia, New Zealand, and South America; with Bangladeshi buyers offering the highest.   


Rebar prices high, trades slow

In the domestic market, Bala billet prices were at PKR93,000-93,500/mt ($584-587/mt) ex-works Punjab, up by PKR750/mt from a week ago. The Davis Index for G-60 billet settled at PKR97,750/mt ex-works Punjab, up PKR1,000/mt from Nov 20. 

The weekly Davis Index for G-60 rebar rose by PKR1,750/mt to PKR112,750/mt ex-works Karachi. In Punjab, G-60 rebar prices were at PKR111,500-112,000/mt ex-works, up by PKR1,750/mt from a week ago. All mills canceled discounts on finished steel amid a cash crunch. 

A few rerolling mills in northern Pakistan have been forced to shut shop due to liquidity crisis and limited demand for finished products. Market conditions remain unsupportive for 100pc capacity utilization and continuous production. During winters, many mills could cut back hours. 


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. The index for Art Q toke scrap equivalent to a mix of HMS and P&S jumped by PKR750/mt to PKR71,250/mt ex-yard Lahore, Friday, from late last week. The weekly index for Pure Q Toke (shredded) too rose PKR1,250/mt to PKR72,750/mt, ex-yards in line with rising imported scrap prices. 



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