Ferrous this week: Davis Index

Turkey

• The daily Davis Index for Turkish imports of US-origin HMS 1&2 (80:20) settled at $256.41/mt cfr on Friday with a fresh deep-sea cargo booking.
• An Iskenderun-based mill purchased 10,000mt of HMS 1&2 (80:20) at $256.50/mt cfr, 14,000mt of shredded scrap at $261.50/mt cfr, and 6,000mt of P&S 5ft at $266.50/mt cfr on April 16.
• The Turkish ferrous scrap market was quiet on Friday as buyers and sellers stepped back to evaluate their trading prospects after active bookings for May shipments during the week. Davis Index estimates mills booked around 250,000mt of scrap this week.
• Local rebar prices settled at TRY3,300-3,370/mt ex-works, including 18pc VAT, on Friday. Export rebar prices in the Turkish market increased by $5/mt to $415-420/mt fob. ($1 = TRY6.94)

US: Extended scrap trade settles above estimates (April 14)

• April US domestic ferrous scrap trading moved slowly but wrapped up Tuesday April 14 at price discounts of $20-30/gt for prime and $30-50/gt for cuts and shredded, compared to March.
• Feedstock flow into yards was slow but so was demand as mills adjusted scrap buys to lower internal production. Depending on region, yards reported 50-75pc declines in scrap volumes sold compared to March volumes. 
• Several mills did not purchase any scrap for April delivery but there was enough mill buying to keep pricing from dropping by more than $50/gt.
• In Chicago, Cleveland, Detroit, Indianapolis, Pittsburgh, and the Carolinas, prime settled at $30/gt down and shredded/cut grades at $50/gt down, although some late sales for obsolete grades were reported in the Midwest at a $35/gt drop from March. 
• In Chicago, the Davis Index for #1busheling dropped by $31/gt to $271/gt delivered, while the indices for HMS 1&2 (80:20) decreased by $53/gt to $187/gt delivered, P&S 5ft declined by $53/gt to $209/gt delivered, and shredded decreased by $51/gt to $229/gt delivered.
• Philadelphia, influenced by exports, settled at $20/gt down for primes and $30-45/gt down on shredded and cuts. 
• Many dealers throughout the US sat out this month, due to prices, lack of material, or lack of mill demand. Some scrap yards reported that prices were unattractive and opted to withhold the little inventory they have for next month. 
• Some market participants expressed the possibility that given the wide uncertainty on COVID-19 policies and lack of understanding of associated health risks, May could turn out to again be a dismal month for sellers. Depending on the situation, a few felt they could wait until June.
• The domestic scrap market in May is dependent on industrial and automotive continuation of production, which will likely bring improved market conditions by June. Crude oil supply reductions should also lead to a recovery that will improve markets and pricing globally, but its overall influence and relevance will depend on timing. 

US: Dock prices rising(April 14)

• US East Coast dock collection prices for ferrous scrap rose by $3-17/gt for all grades and dock locations amid active buying from Turkey and scrap supply tightness.
• Sellers received quotes on Tuesday for HMS 1&2 (80:20) at $10-15/gt increases compared to last week, at levels between $145-165/gt, with a few offers as high as $185/gt, about a $35/gt increase as export material is currently loading at the East Coast. However, some suppliers are receiving collection price offers at the low end of the range and waiting for offers to increase above $170-180/gt.
• Export yard buying prices were relatively flat on the West Coast while Houston dock buying prices rebounded as docks sought to attract volumes on Tuesday.
• Some market participants expect a rebound in west coast bulk sales prices to lift dock prices in the coming week.

US: Containerized prices up on the EC

• The Davis Index for containerized ferrous scrap increased on the East Coast but remained mixed across most grades on the West Coast.
• In New York, the weekly Davis Indexes increased by $5/mt for #1busheling to $238/mt fas, and rose for HMS 1&2 (80:20) by $4/mt to $209/mt. 
• In Los Angeles, the Davis Index for HMS 1&2 (80:20) increased by $12/mt to $190/mt fas.
• Last week, a large placement of P&S 5ft at the same price range as shredded pushed the index upward. Most sellers experienced a slightly higher price on shredded scrap compared to P&S 5ft over the course of this week.
• West Coast prices are ticking up, especially for HMS 1&2 (80:20) in Los Angeles and San Francisco but are being constrained by highly competitive Japanese scrap prices. Trading remains affected by limited buyers as they seek to plan and transact into May without full clarity of COVID-19 measures in their own countries amid tight container availability. 

Pig iron: imports inactive, offers decline

• The weekly Davis Index for basic pig iron (BPI) was unchanged on Thursday at $324/mt cfr New Orleans as markets remained quiet following continued industry slowdown.
• Demand is low and supply is tight as little material is being offered into the market. The few offers available this week remain at $320-330/mt cfr Nola, the same level since March 26, with no new deals confirmed.
• The weekly Davis Index for CIS basic pig iron increased by $4/mt to $276/mt fob Black Sea on Friday after new sales to Turkey.
• CIS pig iron exporters raised their offers in tandem with rising global ferrous scrap prices, but buyers have generally been scarce with only a few in Turkey, as some mills have scrap shortages. According to several market participants, Ukrainian and Russian pig iron sold for around $300/mt cfr to Turkey.
• Some negotiations were reported in Italy, as the country recovers from a severe COVID-19 outbreak and business is slowly returning to normal. Some CIS exporters offered pig iron at around $310/mt cfr to Italy, but because they received bids below $300/mt cfr, no deals were heard. The weekly Davis Index for CIS pig iron in Italy climbed by $2/mt to $300/mt cfr on Friday.

Europe (Apr 14)

• The weekly Davis Index for HMS 1&2 (75:25) in the ARAG region increased by €10/mt ($11/mt) to €180/mt delivered dockside on Tuesday amid an uptrend in the export market.
• Ferrous scrap suppliers from Europe continue to raise collection prices as demand for scrap from foreign outlets is quite strong, especially in Turkey, where buyers continue accepting higher prices. Since the beginning of April, scrap prices have rebounded by around $50/mt in Turkey.
• Export sales, both from Belgium and the Netherlands, are scarce due to the limited availability of cargoes. Inflow of material to the yards remains slow despite rising dockside prices because the automotive industry and demolition sector are still struggling to restart operations after COVID-19 related suspensions. (€1 = $1.10)

Russia (Apr 14)

• The weekly Davis Index for HMS 1&2 (80:20) or A3 scrap in Russia’s Baltic Sea region increased by $41/mt on Monday, while the index in the Black Sea region rose by $37/mt. Both indices settled at $231/mt fob.
• A global shortage of ferrous scrap and rising demand from countries like Turkey has turned the Russian scrap export market bullish. Several suppliers from Rostov-on-Don sold short-sea cargoes to Turkey at higher prices.
• Suppliers from St Petersburg are yet to resume deep-sea cargo sales to Turkey and are watching the situation carefully as they have low inventories and slow collection. Some Turkish mills are checking offers from St Petersburg, but they are limited.
• Scrap collection has been difficult in Russia amid the COVID-19 spread. The weekly Davis Index for A3 scrap increased by Rub1,425/mt ($19/mt) in St Petersburg dock to Rub13,900/mt delivered on Monday, but remained flat in Rostov-on-Don dock at Rub11,500/mt delivered. ($1 = RUB73.56)

UK

• The weekly Davis Index for north UK HMS 1&2 (80:20) ferrous scrap inched up by £3/mt ($4/mt) to £110/mt delivered dockside and increased by £5/mt to £105/mt delivered for south UK HMS 1&2 (80:20) on Tuesday.
• Davis Index notes that the range in grade and regional contributions have narrowed over the past week pulling some indices higher, rather than representing tighter supply or an improvement in export demand.
• Major UK ferrous scrap processors, permitted to operate under “essential” worker status, reasserted the complete lack of activity from merchant collectors given that the country is now in its fourth week of an initial three-week lockdown period.
• Some smaller domestic yards observed it was more beneficial to stockpile and “sit on” premium grades, such as plate, girder and structural, rather than sell them at what they consider relatively low prices under current circumstances.
• The weekly Davis Index for UK small bulk HMS 1&2 (80:20) and shredded ferrous scrap rose by €16/mt over the past week to €191/mt fob and €196/mt fob, respectively, on April 17.
• While some major UK scrap exporters have raised benchmarks in response to a recent flurry of Turkish bookings, others are still holding out for higher prices.
• There appears to be growing consensus among market participants that recently rising seaborne benchmarks have hit a wall, and many expect prices to begin falling from next week onwards.

 Germany

• The monthly Davis Index’s German ferrous scrap indices declined by an average of €23/mt ($25/mt) over the past month, depending on grade and location, following the conclusion of mill-yard negotiations in April.
• Most German steel mills significantly reduced their ferrous scrap order volumes this month, with many producers scaling back operations to match falling domestic steel consumption, particularly from the automotive industry.
• While some mills had planned production outages during the week leading up to Easter, others extended theirs an additional week because of decimated steel demand, resulting in an approximate capacity utilization rate of 40-60pc nationwide.
• However, reduced export demand—the result of temporary mill closures, particularly in Belgium, Italy, and Luxembourg—created relatively healthy ferrous scrap supply for domestic steel producers.
• German ferrous scrap buyers who had initially tabled bids as much as €40/mt below April purchases revised their tenders because major seaborne benchmarks, particularly to Turkey, sharply increased over the past two weeks.
• In Germany’s north, south, and west, Sorte 1 (E1) decreased by €27-37/mt to €182-198/mt, while Sorte 3 (E3) dropped by €25-34/mt to €190-215/mt, and Sorte 4 (E40) declined by €23-37/mt to €196-222/mt.

 Spain

• Davis Index’ monthly Spanish consumer ferrous scrap indices edged €5-10/mt higher, depending on grade, following the conclusion of recent deals in mid-April.
• Mills had pulled bids for seaborne ferrous scrap market and reduced order volumes for domestically sourced material in late March thru early April, in response to the escalating outbreak of COVID-19 and uncertainty over legislative changes.
• Unlike major seaborne ferrous scrap benchmarks, prices for Spanish headline scrap grades effectively froze in situ for nearly a month with heightened uncertainty and restrictive movement measures leading to very little new business conducted. 
• More recently, however, Spanish mills have dipped their toes back into the market following clarification from the government on the steel industry being reclassified as an “essential” sector and legitimately permitted to conduct commercial operations.
• As a result, the indices for E1 (old thin) and E3 (old thick) increased €5/mt and €10/mt over the past month to €190/mt and €210/mt, respectively, delivered to mill, while the E40 (shredded) index remained unchanged on the same basis.
• The Davis Index’s northern Spain for HMS 1&2 and shredded ferrous scrap small bulk indices increased by €15/mt ($16/mt) over the past week to €223/mt cfr and €228/mt cfr, respectively, on April 17.

India’s domestic market

• Indian domestic ferrous scrap prices continued to remain flat amid no manufacturing activity. The Davis Indexes for HMS 1&2 (80:20) this remained unchanged Rs20,150 ($262.11/mt) del Mandi Gobindgarh. The indexes for HMS (80:20) at other places too settled flat at Rs21,000/mt del Chennai, Rs22,475/mt del Durgapur, Rs 22,050/mt del Raipur, Rs22,450/mt del Hyderabad, Rs21,000/mt del Goa, Rs22,200/mt del Indore, Rs21,950/mt del Jalna and Rs23,400/mt del Ahmedabad.
• The daily indexes for sponge iron settled at Rs20,000/mt del Mandi Gobindgarh, Rs18,800/mt del Chennai and Rs17,900/mt del Mumbai mills, also flat as markets remained shut.
• The government is set to allow construction and infrastructure work to start in less affected areas, under strict guidelines. The Indian Steel Association (ISA) tweeted a sigh of relief on this news, with April 20 as the day for a few of the restrictions to be lifted. However, all industries related to steel are currently at a loss to manage the supply of raw material through rail, air, or water, and labour supply, given that all contract staff has migrated to hometowns.
• Mono steel in Gujarat started operation with export order of billets to China at $400 cfr China. Late in the week, the company also offered billets in the domestic market at Rs29,500/mt. Rebar mills are preparing to recommence production as traders and retailers in Gujarat have raised enquiries expecting demand to pick up after construction activities resume.
• A few integrated steel mills in India like Godawari Power and Ispat and Sarda Energy and Mineral have re-started their production at some of their units. The government has permitted secondary steel mills to resume production. But all the induction furnaces in North India remained shut, due to demand concerns. Another mill, Kalyani Steel idled blast furnaces in Pune and Karnataka for the same reason.
• Also, despite the government granting relaxation for the mining sector, iron ore trade remains hit with no hopes of demand ramping in sponge iron units soon.
• Jindal Steel and Power looks to explore seaborne opportunities with demand in domestic markets coming to a standstill. The company usually sells 30pc of its steel production in export markets and the rest in India. In March and April, the situation, however, seems to have reversed as the Indian rupee stood at Rs76.6 against US$1 on April 17 from Rs73.9 a month back.

India imported scrap

• The recycling industry has requested an extension in waiver of detention and demurrage charges at ports until May 3. Traders are facing challenges to clear out back logs that are estimated to be of over two months now.
• The weekly Davis Index for containerised shredded increased by $8/mt to $261/mt cfr Nhava Sheva on Friday. There were very limited offers in the market around $265-270/mt cfr Nhava Sheva, but no mill was ready to place bids.
• A shortage of domestic scrap is anticipated in the coming days on a significant drop in generation rates from demolition and manufacturing activities. Shipbreaking operations generating around 8,000mt of ferrous scrap per month could remain shut for at least a month.

Japan

• Japanese ferrous scrap export prices rebounded by JPY1,000-1500/mt from the prior week amid tightening supply. In the Kanto region, #2 HMS traded at JPY19,500-20,000/mt fas Tokyo bay.
• The Davis Index for HS and shredded scrap settled unchanged at JPY22,250/mt and JPY22,000/mt fas Japan, respectively. Japanese yen depreciated to JPY108.85 against US$1 on Wednesday from JPY107.30 in the prior week.
• On April 15, the weekly Davis Index for #2 HMS settled at JPY18,750/mt ($175/mt) fob Japan on Wednesday, down by JPY500/mt and Index for busheling settled at JPY22,000/mt ($205/mt) fob Japan, down by JPY500/mt from the prior Wednesday.
• Japanese HMS 1&2 (50:50) in small bulk cargoes traded at $220-225/mt cfr Taiwan and $225-230/mt cfr Vietnam, up by $10-15/mt from the prior week an upward movement in global ferrous scrap and billet markets.

Taiwan

• Imported ferrous scrap prices in Asia reversed a downward trend this week, following a rise in the global market.
• In container markets, the weekly Davis Index for containerised US origin HMS 1&2(80:20) settled at $211/mt cfr Taiwan on Thursday, up by $9/mt. Trades for containerised HMS 1&2 (80:20) concluded at $209-212/mt cfr Taiwan in the early week, subsequently rose to $213-215/mt cfr Taiwan in the late week. Offers from suppliers are now in the range of $215-220/mt cfr Taiwan as supply continued to tighten.
• In small bulk markets, Japanese HMS 1&2 (50:50) in small bulk cargoes traded at $220-225/mt cfr Taiwan, up by $10/mt from the prior week. Japanese HMS 1& 2 (50:50) prices are likely to remain on an upward trend as suppliers withdrew lower offers from the market, shared a trader. Indian steelmakers offered billets at $380-385/mt cfr Taiwan, up by $10/mt from the prior week.
• The Davis Index for Japanese HMS 1&2 (50:50) in small bulk cargoes settled at $211/mt cfr Taiwan, down by $12/mt from the prior Wednesday.

South Korea

• Leading integrated steelmaker Posco is likely to halt its ferrous and stainless-steel purchases at Gwangyang Works and Pohang Works from both the domestic and imported markets for an indefinite period. Sales of finished flat steel and special high-grade steel have dropped in South Korea with the spread of COVID-19 in the country.
• Hyundai Steel is likely to follow suit and scale down scrap purchases if the situation doesn’t improve in the coming days. The company’s electric arc furnace at Dangjin could operate at lower capacity. Steel mills have requested the Korea government to provide some relief as they have spent a huge amount of money to buy emission rights this year. Higher production costs and weak steel demand would inevitably lead steel producers to scale down of productions in the coming days.
• Kia Motors and Hyundai Motors in South Korea are mulling a suspension of operations at three domestic factories. The spread of the virus has impacted Korean automakers exports to Europe and the United States. Hyundai Motor halted a line producing its Tucson sport utility vehicle in Ulsan from April 13-17. 
• Japanese #2 HMS offered in the range JPY19,000-19,500/mt fob Japan with Busheling and HS in the range JPY23,000-23,500/mt fob Japan for Korean buyers.

Vietnam

• In bulk markets, Vietnamese steel mills continued booking Japanese #2 HMS scrap despite prices moving up by $10-15/mt. Around 35,000mt of #2 HMS in small bulk cargoes traded at $230-235/mt cfr Vietnam, with offers $235-240/mt cfr in the northern region.
• An Australian HMS 1&2 (80:20) cargo was offered at $245/mt cfr Vietnam, up $7/mt from the prior week. Russian A3 offers were at $235-240/mt cfr South Vietnam.
• In the container market, the Davis Index for containerised busheling, P&S 5ft and shredded, settled at $250/mt cfr, $243/mt cfr and $236/mt cfr Vietnam.
• The Davis Index for containerised HMS 1&2 (80:20) settled at $219/mt cfr Vietnam, up by $4/mt from the prior week.

Indonesia

• Indonesian mills stayed away from buying ahead of the Ramadan month, and the resulting unavailability of labour, as most travel to their hometowns to mark the occasion. The impact of the COVID-19 outbreak has also lowered the demand from major mills.
• Trades for imported scrap were very limited this week. The Davis Index for containerised P&S 5ft settled at $246/mt cfr Jakarta, up by $6/mt from the prior week. US-origin P&S in 40-foot containers traded at $245-250/mt cfr Jakarta.

China

• The weekly Davis Index for domestic HMS 1&2 (80:20) settled at CNY2,350/mt ($333/mt) inclusive of 13pc vat delivered to mill in eastern China, down CNY175/mt from the prior week.
• Chinese domestic scrap prices dropped to over a year’s low. Chinese steelmakers are looking to save their input costs amid falling finished steel prices in the domestic and export markets. A few mills opted to cut their purchase prices for ferrous scrap though prices are less likely to drop more on recovery in steel demand this week.

Thailand

• Thailand’s domestic scrap prices remained unchanged on subdued domestic steel demand. Thailand also continues to be under lockdown. 
• The weekly Davis Index for domestic HMS 1&2 (80:20) settled at THB7250/mt ($221/mt) delivered Rayong, inclusive of taxes, unchanged from the prior week.

Malaysia

• The Malaysian government has extended is national COVID-19 lockdown by two weeks, to April 28. In the absence of any trades and a complete suspension of mining and production related activities, Malaysian ferrous scrap prices remained flat this week, with no bids in the market. 
• Malaysian steel mills bid for US-origin containerised shredded at $235/mt cfr Malaysia, though an extension to the country’s lockdown kept trades at a minimum. 

Bangladesh

• Bangladesh has extended its national lockdown till April 25 and steel mills which were operational until last week, have started idling their furnaces due to demand concerns in the near term. The govt announced a relief package of about $1.7bn for its small-scale industries.
• Mills booked two bulk cargoes for lower-priced Japanese mix scrap this week for their immediate requirements due to a shorter delivery period.
• In the container market, containerised shredded traded at $270-275/mt cfr Chattogram, after which offers rose to $280-285/mt cfr Chattogram.
• Demand for finished steel products remains stagnated with infrastructural projects in the country on hold. The ban on shipbreaking activity continued a shortage of domestic ferrous scrap.

Pakistan

• Scrap importers, however, continued to be in the market amid limited domestic scrap availability. 
• The weekly Davis Index for containerised shredded increased by $19/mt to settle at $270/mt cfr Port Qasim on Friday. Early this week, trades for containerised shredded concluded at $265-270/mt cfr Qasim. A few trades for shredded concluded at $270-275/mt cfr Qasim.
• Pakistan’s domestic steel market remains flat, but some northern region-based steel makers have been allowed to resume production while a few others are expected to resume production next week.

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