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

Most ferrous scrap importers lowered bids post Kansai tender this week. On Wednesday, South Korean steel mill Dongkuk purchased 23,000 mt of #2 HMS at JPY41,000/mt fob. Bids are expected to fall further on bearish global sentiment.


Tokyo steel lowered scrap purchase bids by JPY500/mt ($4.6/mt) for Takamatsu and Utsunomiya plant, effective March 17, amid sluggish domestic demand for steel and stiff competition from Chinese producers in the export markets. Bids for #2 HMS heard at JPY42,000/mt ($384/mt) delivered Tahara, JPY40,500/mt delivered Okayama, JPY41,000/mt delivered Kyushu, JPY41,500/mt delivered Utsunomiya and JPY39,500/mt delivered Takamatsu.


The index for P&S 5ft (small bulk) China port settled at $483/mt cfr, down by $15/mt from the prior week. Offers for HS fell by $15-20/mt to $485/mt cfr China with bids at $480/mt cfr on Wednesday. Prices for 62pc Fe fell by $13/mt to $163/mt cfr Qingdao on Monday from the prior week amid pollution-related production restrictions, while rebound by $2.31/mt to $165.3/mt on Tuesday on recovering demand.


Traders indicated that the Chinese appetite for ferrous scrap will increase in the coming months with the government promoting steel production via EAF-mode to reduce carbon emission. Chinese mills are negotiating for Japanese, South Korean, US and other regions with market participants expecting more volume trade in April.


Index for #2 HMS fell by JPY2,000/mt to JPY41,000/mt fob amid deals by South Korean mill on Tuesday. On fas basis, the index fell by JPY3,458/mt to JPY39,000/mt ($357.6/mt) fas with deals heard post Kansai tender. Traders said importers are lowering bids daily amid weak global cues and opined prices are yet to hit bottom.


Bids for Japanese #1 busheling (Shindachi) fell by JPY2,000/mt to JPY45,500/mt fob and expected to fall further by JPY500-1,000/mt due to limited demand from importing countries and domestic steel mills. The weekly index for the grade fell by JPY1,625/mt to JPY47,750/mt fob Japan, while on a fas basis the index fell by JPY2,500/mt to JPY44,250/mt fas.


With Turkish mills reducing scrap purchase prices, the index for HMS 1&2 (80:20) fell by $20/mt to $430.3/mt cfr on Tuesday from the prior week (March 10). Traders expect a fall in global ferrous scrap prices next week due to improved supplies.


The weekly Davis indices for HS and shredded, Wednesday, fell by JPY2,750/mt to JPY44,000/mt fas. Limited trades heard as most mills adopted a wait and watch strategy on falling global scrap prices. South Korean, Taiwanese and Vietnamese mills were closely watching Chinese and Turkish purchases before negotiations.


Offers for HMS 1&2 (50:50) fell by $15-20/mt to $445/mt cfr Vietnam this week. After Tokyo steel lowered bids, the index for the grade fell by $18/mt to $438/mt cfr Haiphong.


In Taiwan, the index for Japanese HMS 1&2 (50:50) fell by $17/mt to $428/mt cfr. Bids fell by $20/mt to $420/mt cfr. Export bids were held back post Kansai bids.


Low domestic scrap demand and stiff competition from Chinese producers in the export markets have added to the bearish market sentiment in Japan.



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