Indian buyers were unwilling to book imported ferrous scrap amid weak domestic fundamentals. Mills faced margin squeeze as sales in both domestic and export markets were below expectations. Demand and prices are expected to recover towards the month-end.
A monsoon lull and fear over a third COVID-19 wave added to the bearish sentiment.
The daily Davis Index for containerized shredded on Friday rose by $1.25/mt to settle at $533.75/mt cfr Nhava Sheva. The index declined by $0.75/mt from last Friday due to low bids. Offers were above $540/mt cfr Nhava Sheva. In Pakistan, mills were willing to accept a rise in offers amid an increase in steel prices. Indian alloy makers were unwilling to accept asking prices above $530-535/mt cfr Nhava Sheva.
The Davis Index for US-origin HMS 1&2 (80:20) remained unchanged at $480/mt cfr Nhava Sheva. Suppliers from the US, Australia, UK, and Latin America resisted present bids which are lower by $40/mt than their expectations.
The daily index for UAE-origin HMS 1&2 (80:20) inched up by $1/mt to $455/mt cfr Nhava Sheva amid an uptick in rebar prices. Bids were below $435-440/mt cfr Nhava Sheva for HMS 1&2 (80:20). UAE sellers found prices in Pakistan more attractive. In the coming days, however, Indian bids could rise and match global trends. For UAE-origin #1 HMS, offers were at $480/mt cfr Chennai.
The Davis Indexes for P&S and #1 busheling were at $541/mt and $564/mt cfr Nhava Sheva, respectively, both down by $1/mt from July 2. Supply crunch for prime grades kept prices firm. Turnings scrap and West African HMS traded in thin volumes at $445-455/mt cfr Nhava Sheva.
In the Alang shipbreaking market, Melting scrap prices on Friday declined by Rs100/mt to Rs33,900/mt ex-yards. From last Friday, however, they rose by Rs300/mt. In Mumbai, rebar prices rose by Rs200/mt to Rs46,400/mt ex-works. Prices have increased around Rs800/mt from last Friday on an increase in demand. In Mandi Gobindgarh, 50pc power cuts announced by the state from July 8-18 affected operations at many heavy industries, including mills. Ingot prices inched up to Rs43,100/mt ex-works.
On Friday, Chinese steel futures for rebar and HRC maintained an uptrend, but iron ore prices declined as supply eased. Steel prices could stay elevated after July once summer begins. Domestic billet prices were unchanged from a day ago at CNY5,020/mt ex-Tangshan inclusive of VAT. Prices rose by CNY160/mt from last Friday as mills resumed operations after productions cuts ended.
Iron ore prices with ferrous content of 62pc dropped from $223/mt on Tuesday to $215/mt cfr North China on Friday.
In the export market, expectations for billets were above $600-605/mt fob India following a positive sentiment in the market. Participants expect a marginal drop in Japan and Southeast Asian prices. But a steep decline seems unlikely.
The daily Davis Index for containerized shredded on Friday, settled at $540.92/mt cfr Indian subcontinent, up by $2.51/mt; while that for containerized US-origin HMS 1&2 (80:20) settled at $496.34/mt cfr Indian subcontinent, up by $1.03/mt. The international freight rates were largely flat this week. A container shortage continues in the global market.