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

Ferrous scrap buyers delayed purchases amid weak domestic steel demand in Pakistan and Bangladesh. Trades reported at prices lower by $3-5/mt amid on Tuesday. Mills offered discounts to liquidate their finished steel inventories. In Bangladesh, few buyers were active in the market as ferrous scrap offers continued to rise sharply.



Bangladesh’s steelmakers are struggling with cash flow crunch as the COVID-19 crisis has disturbed their finances. Low sales of construction steel have led to losses in revenue and dues in the form of payment to utilities and other service providers. Steel mills are under pressure to liquidate their finished steel inventories at a discount to avoid defaults. Discounts offered by manufacturers have kept domestic steel prices lower despite recovering demand.


The Davis Index for containerized shredded settled Tuesday at $327.14/mt cfr Chattogram down $2.86/mt from Monday. The index dropped $5/mt in line with weak demand as the prices adjusted from a 13-month high scaled last week. A few trades for shredded reported at $327-330/mt cfr Chattogram from the UK while a few buyers were looking for shredded from suppliers in Australia and New Zealand at around $323-325/mt cfr Chattgram.  


Indian sponge iron prices remain volatile and are still unviable for small steelmakers in Bangladesh.


Trades for containerised UK-origin HMS 1&2 (80:20) reported at $315-317/mt cfr Chattogram Tuesday, marginally down from the prior day. The index for US-origin HMS 1&2 (80:20) was at $316/mt cfr Chattogram, down $4/mt from Friday. Sellers offered HMS 1&2 (80:20) at $320/mt cfr Chattogram, while buyers were still at $315-318/mt cfr Chattogram. P&S scrap traded at $325/mt cfr Chattogram, down $5/mt from the prior week.


The index for Latin America-origin HMS 1&2 (80:20) settled at $310/mt cfr Chattogram, stable from Monday. A few containers for Brazilian HMS 1&2 (80:20) traded at $308-310/mt cfr Chattogram, while #1 HMS of South Africa and South American-origin traded at $317-320/mt cfr Chattogram.  


Limited supply kept Bangladeshi domestic ferrous scrap prices stable on Tuesday. Domestic shipbreaking scrap equivalent to P&S were offered at BDT31,300-31,500/mt del mill, up BDT500-1,000/mt from a week earlier while HMS 1&2 (80:20) traded at BDT29,000/mt ex-Chattogram, flat from Friday.  


Amid weak domestic demand, most small and medium scale steelmakers in Dhaka expect prices to drop further in the coming days. Small scale producers offered rebar at BDT49,000-49,500/mt ex-works while medium-scale mills sold rebar at BDT50,500-51,000/mt ex-yards. Only branded rebar suppliers were able to afford imported scrap. 


Almost 60pc of the steel mills in Dhaka are on the verge of shutting down as they are unable to sell rebar at a profit. This has significantly reduced containerised scrap trades in Bangladesh.   



Pakistani steel mills were slow to book imported ferrous scrap on Tuesday amid weak domestic steel demand. However, the rise in domestic scrap prices on limited supply encouraged traders to book imported scrap containers. 


The Davis Index for containerized shredded on Tuesday settled at $320.31/mt cfr Port Qasim, down $3.63/mt from Monday in line with slow trades in Turkey. Trades for UK-origin shredded in containers reported at $318-320/mt cfr Qasim. A few bids on Tuesday reported at $315-317/mt cfr Qasim against offers of $320-322/mt cfr Qasim.  


Suppliers are resilient despite a few distressed sales at lower prices. They are confident of selling above $320/mt cfr Qasim. Most suppliers showed little or no interest in bids below $320/mt cfr Qasim on Tuesday. A deal for 500mt UK-origin shredded was confirmed at $318/mt cfr Qasim.  


The Davis Index for UAE-origin HMS 1&2 (80:20) Tuesday settled at $309/mt cfr Port Qasim, inching down by $1/mt from the prior day. Trades for UAE-origin mixed #1 HMS and P&S sarya scrap were reported at $315-320/mt cfr Port Qasim. Bids remained mostly at around $305/mt cfr Qasim. Buyers preferred UAE scrap as the export ban period has been nearing completion of four months and a shorter delivery period lowers risk of price volatility.


The index for US-origin HMS 1&2 (80:20) settled at $307.5/mt cfr Port Qasim, down $0.36/mt as buyers placed bids at $303-305/mt cfr Qasim on Tuesday.


In the domestic market, Bala billet prices reported at PKR92,500/mt ex-works Punjab with limited trades being materialised. Higher imported scrap pushed domestic Pure Q toke scrap equivalent to shredded at PKR72,300-72,600/mt ex-works Lahore, up PKR1,000/mt from a week ago. Mills are struggling with limited cash flow and weak steel demand.  


Finished steel prices in southern Pakistan remained low. Leading steelmakers offered discounts of upto PKR2,000/mt to liquidate their inventories. Rebar trades reported PKR109,000-110,000/mt ex-Karachi after discounts. Gadani’s shipbreaking market remained stable in the range of $350-360/ldt for scrapped containers and tankers.  


($1= PKR166.33; BDT84.83)


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