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

A sharp rise in the imported scrap prices driven by tight supply, globally, forced Asian ferrous scrap buyers to rush for domestic scrap purchases for immediate needs. Domestic scrap prices in Japan, Vietnam and Taiwan rose on strong demand, while in South Korea, Malaysia prices were flat to down.



Japan’s leading EAF steelmaker Tokyo Steel announced a fourth successive price hike in two weeks time. The first three were on Nov 14, Nov 17 and Nov 20. Effective Nov 25, Japan’s Tokyo steel raised ferrous scrap purchase prices by JPY1,000/mt ($9) at Tahara and JPY500/mt at Okayama plant. Prices unchanged at the other three works. The steelmaker revised #2 HMS price to JPY32,000/mt ($306) delivered plant Tahara. 


This marked the sixth successive price hike in November. The steelmaker had raised finished steel product prices for December deliveries by JPY2,000/mt ($19/mt) following bullish global cues and a sharp rise in ferrous scrap purchase prices in Japan. Tokyo Steel could raise steel prices further amid rising raw material cost.


South Korea 

South Korean domestic ferrous scrap prices trended flat with Korean mills reducing or keeping domestic scrap bids flat. Amid rising imported scrap offers, Korean steel mills are expected to focus on domestic scrap. Except for Hyundai, most Korean mills are set to decrease domestic scrap prices by KRW10,000/mt ($9/mt) delivered Pohang this week, said market participants. 


The Davis Index for domestic Heavy A, Tuesday, settled flat at KRW337,500/mt and KRW342,500/mt ($308/mt) delivered Incheon and Pohang, respectively, with major steelmakers buying domestic scrap at index price.


A few mills preferred lower-priced Light A scrap with the weekly Davis Index for domestic Light A settling flat at KRW325,000/mt delivered Pohang mill. Trades for the grade were reported at index price. Suppliers held materials expecting a price hike amid rising global ferrous scrap prices, but most mills shied away from high-priced imports. 


With Chinese buyers increasing billet imports, steel mills in Korea are expected to increase production for December deliveries, on the other hand, fall in iron ore prices is expected to pull down offer prices, as per market participants.



South Taiwan Feng Hsin raised rebar and scrap prices by TWD300/mt on Monday. Domestic steel mills are preferring local scrap due to rising global scrap prices. Market participants indicated that mills would lift rebar prices in the coming weeks on high input costs. Feng Hsin’s base offers for rebar remained at TWD15,400-15,600/mt ex-works. 


The weekly Davis Indexes for domestic HMS 1&2 (80:20) in South and North Taiwan Tuesday moved up by TWD200/mt($7/mt) and TWD250/mt to TWD8,250/mt ($289/mt) and TWD8,500/mt delivered southern and northern mill, respectively. 


In seaborne markets, US-origin containerized HMS 1&2 (80:20) daily index settled flat at $305/mt cfr Taiwan. Most bids were at $295-300/mt while offers soared to $308-310/mt on Tuesday. 



The weekly Davis Index for HMS 1&2 (80:20) rose by VND40,500/mt($1.7/mt) this week to VND7,190,500/mt ($308/mt) delivered South Vietnam inclusive of taxes, with limited deals heard around index price. Price remained unchanged in dollar terms due to depreciation of Vietnamese dong this week. The domestic steel market is gradually recovering and purchasing imported and domestic scrap. A sharp rise in HRC and rebar sales domestically pushed steel mills to restock ferrous scrap aggressively. 


A few mills were in the bulk market with a couple of deals heard on Friday at $340/mt cfr Vietnam from the US west coast supplier yards and $342/mt cfr Vietnam from Australia. Bids remained unchanged from last week on Tuesday. Containerised imports saw no rise in volumes as Vietnamese mills focused on bulk scrap purchases.



In China, Shagang Steel kept finished steel prices flat this week, impacting ferrous scrap prices which too fell on Tuesday. Fall in iron ore prices and low to flat demand in the domestic market this week were also seen as reasons for the decline in scrap prics as per market participants. They further added that scrap prices might fall further this week, driven by fall in iron ore prices and cold weather. 


The weekly Davis Index for the HMS 1&2 (80:20) settled at CNY2,740/mt ($416/mt) delivered mill, down by CNY20/mt($3/mt). 


On Tuesday, prices for Q235 150mm square billets in Tangshan dropped by CNY10/mt with mix indications for December demand. Prices were at CNY3,580/mt ex-works, including the 13pc VAT. SE Asian billet export offers were at $490-495/mt cfr China, up $10/mt from the prior week. An offer for Japanese EAF billet for January shipment was at $488-490/mt cfr Manila, while Black Sea billet for February shipment at $490-495/mt cfr. Induction furnace billet from Vietnam is tagged at $490-500/mt cfr Manila.


New ferrous scrap import regulation expected to be out before the start of the year 2021 could be a game-changer for the ferrous scrap market amid tight scrap supply, said a trader. China will remove its prohibition on 136 steel products from December 1 as per the Ministry of Commerce (MOC) last week. This means steel mills need not pay import duties on imported steel which will be reprocessed for exports.



The weekly Davis Index for domestic HMS 1&2 (80:20) rose by THB200/mt($6/mt) to THB9,800/mt ($323/mt) delivered Rayong mill inclusive of taxes amid stable demand. Deals were heard for the grade at the index price. Mills preferred local scrap amid higher imported prices this week.


The imported scrap market remained highly bullish giving hopes for Indonesia billet makers to cater to Chinese demand. This encouraged a few buyers to restock ferrous scrap. Domestic short supply of ferrous scrap too added to price rise this week. 



The weekly indexes for HMS 1&2 (80:20) fell by MYR80/mt ($19/mt) and MYR70/mt to MYR1,120/mt ($274/mt), and MYR1,1800/mt delivered western mills and eastern mills including taxes, respectively. A fall in global iron ore prices and weak domestic demand pulled down prices in Malaysia with steel mills expected to buy cautiously this week. Market participants said mills are cautiously buying domestic scrap and avoiding imports. Still, offers for imported US-origin HMS 1&2 (80:20) rose by $15-20/mt to $310-315/mt cfr Malaysia on bullish global cues. 


($1= JPY104.28; TWD28.5; CNY6.58; THB30.16; MYR4; VND23325; KRW1,109)

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