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

Prices for Indian domestic ferrous scrap continued to rise in a bullish steel market. A persisting shortage of material for over a month also gave prices a lift. Market opinions about the price direction were mixed.


Some traders believe the resurgence of COVID-19 will weigh down demand in most markets and lead to price correction. Mills, on the other hand, are hoping that the impact of this wave of the pandemic on steel demand and prices will be limited, especially since April through June is the peak business period.


In Ludhiana, the bi-weekly indexes for busheling rose by Rs1,200/mt ($16.34/mt) to Rs37,700/mt del mill, end cutting rose by Rs1,500/mt to Rs37,500/mt del mill. The index for Sponge iron was up by Rs900/mt to Rs31,700/mt del mill. But at the present price levels, demand for both, Sponge and scrap came under pressure. The rising tally of the virus in Punjab has made it one of the three worst-hit states in the country. Labourers in the manufacturing and other steel downstream sectors, therefore, were unwilling to work full time. Should the activities in these sectors slow down, prices for semi-finished and finished steel could decline and impact domestic scrap prices.


The daily Davis Index for HMS 1&2 (80:20) rose by Rs500/mt to Rs32,000/mt del Mumbai mills and the index for Sponge iron rose by Rs600/mt to Rs29,700/mt del Mumbai mills. Although the Maharashtra state government has announced a partial lockdown till April 30, domestic steel demand in the city is still stable. But the city has started witnessing an exodus of labourers. If the situation persists, mills could be forced to slow their production.


The bi-weekly Davis Index for HMS 1&2 (80:20) rose by Rs1,000/mt to Rs 33,250/mt del Chennai mill. The index for Sponge iron increased by Rs2,500/mt to Rs31,000/mt del mill due to the rise in iron ore prices.


State-owned miner, NMDC raised its iron ore prices for lumps and fines by $7/mt for April. This, along with the central government increasing the royalty on mining by 22-23pc has impacted the Sponge iron market. Many mills in India, especially on the East coast focus on exporting billets. Billet export offers were heard at $640-650/mt cfr SE Asia or $615-620/mt fob, up by $20-25/mt from a week ago. To ramp up their production and take advantage of a bullish global market, many mills were in the market for imported ferrous scrap. A rise in overseas ferrous scrap prices made domestic sellers raise their asking prices. But, activity in the domestic market slowed with many workers opting to take a leave to vote in the assembly elections.


In Mandi Gobindgarh, the daily Davis Index for HMS 1&2 (80:20) rose by Rs300/mt to Rs35,250/mt del mill; while the index for Sponge iron rose by Rs200/mt to Rs31,800/mt del mill, compared to Monday, while bids were at Rs30,000/mt. Mills opted for domestic material over imported as price levels for the former were more viable. Many traders believe prices will rise further in Asia as they expect Turkey to return to the market for May cargoes and lift seaborne scrap purchase prices. The index for Sponge iron rose by Rs400/mt to Rs31,500/mt del mill, with limited deals at these levels.


In other markets, the bi-weekly index for HMS rose by Rs1,750/mt to Rs33,250/mt del Jaipur mill, while the index for Sponge iron was up by Rs850/mt to Rs32,600/mt del mill.


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