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

Most imported ferrous scrap buyers went into a wait-and-watch mode on Wednesday expecting prices to fall in the coming days. Buyers are keeping an eye out on Turkish bulk deals to guage the price direction. Domestic steel prices have lost steam amid strong resistance by end-users, including the builders’ association.  


Container shortage has elevated freight rates to Bangladesh adding to the steelmakers’ woes. If finished steel prices in the domestic market in the near term pick up, then buying imported ferrous scrap in containers at such current firm prices could be risky. Many mills are opting for either bulk deals or shipbreaking scrap. The country is likely to start its COVID-19 vaccination drive soon, which is expected to lift market sentiment.


The daily Davis Index for containerized shredded, Wednesday, settled at $507.5/mt cfr Chattogram, down by $2.88/mt from Tuesday. There were limited trades for shredded as most buyers preferred to book lower-priced HMS scrap. Offers on Wednesday were at $510-515/mt cfr Chattogram while buying interest below $500/mt cfr Chattogram. Availability remains a concern with yards running short of material.  


A leading steel mill in Chattogram has concluded a small bulk from Japan. In the tender that concluded on Wednesday in Kanto, 15,000mt #2 HMS was booked by Japanese trader Toyotsu. The cargo will be delivered by February 28.  


The daily Davis Index for containerized HMS 1&2 (80:20) of the US-origin settled at $486.79/mt cfr Chattogram, up by $1.29/mt. On Wednesday, the standoff extended further as there were limited offers and bids in the market. The daily Davis Index for containerized HMS 1&2 (80:20) of the Latin-origin settled at $481/mt cfr Chattogram, down by $1/mt on lower bids. Offers for HMS #1 from Chile were at around $485-490/mt cfr Chattogram.  


Domestic steel prices down

Despite healthy demand for finished steel on resumption in economic activities and infrastructural projects, domestic steel prices in Bangladesh were under pressure. Prices that had hit a record high are non-workable amid cash crunch and non-acceptance from end-users.    


Ship scrap equivalent to P&S continued its downtrend with offers at BDT41,500-42,000/mt ex-works on Wednesday. Domestic HMS 1&2 (80:20) was offered at BDT40,500-41,000/mt ex-yards Chattogram while billet traded at BDT50,000-50,500/mt ex-works Chattogram. Mills are offering discounts to encourage trades.


Medium-scale mills in Dhaka held their offers for rebar at BDT60,000-61,000/mt ex-works. Rebar prices by medium mills, looking to generate cash, were around BDT60,000/mt ex-works, significantly lower than large steelmakers asking rates which could hurt ferrous scrap buying this week.


Large steelmakers are not ready to lower their asking prices to maintain their spread between scrap and rebar. With scrap prices jumping by $100-120/mt since early-December, rebar prices could only rise by $40-50/mt. This could impact large mills’ profit margins as they strongly resist low bids. Offers for rebar were at BDT66,000-67,000/mt ex-works despite their target to keep their prices above BDT70,000/mt ex-works at least, throughout Q1 2021. Medium-scale mills in Dhaka held their offers for rebar at BDT62,000-63,000/mt ex-works.  


($1= BDT84.68)

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