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

Pakistani mills resisted higher offers for imported ferrous scrap eyeing a further drop in the prices before restocking. Sentiment softened amid slow demand and low bids from the other two subcontinental markets.  


On Saturday, provincial authorities in southern Sindh imposed a partial week-long lockdown to curb the alarming increase in COVID-19 cases in the region. The commercial hub of Karachi and other urban centres in the province will be under partial restrictions until Aug 8. 


Domestic steel prices maintained an uptrend driven by high input costs and a depreciating currency. Pakistani rupee continued to depreciate against the US dollar to reach PKR163.13 on Aug 2, from PKR160.0 on July 26.  


Pakistani mills, Monday, continued to target below $535/mt cfr Qasim for shredded scrap. The daily Davis Index for containerized shredded, Monday, dropped by $2/mt to settle at $540/mt cfr Port Qasim. A few deals for the UK/EU origin confirmed at $540-542/mt cfr Qasim late last week. Most sellers and traders, however, are resisting lower bids amid a recovery in finished steel prices. They anticipate restocking by the secondary and rerolling mills on resuming operations. Ferrous scrap inventories are believed to be limited.


In China, steel futures Monday recorded over 5-6pc decline pulling down domestic spot prices by CNY100-200/mt, while export offers fell by upto $10/mt. Sentiments in Southeast Asian markets too were bearish amid record rise in the COVID cases due to a new wave. 


Turkish mills believe scrap supplies have eased. The index for the US-origin HMS 1&2 (80:20) Friday was at $469.84/mt cfr Turkey, down $1.04/mt from a day prior.  


Sellers in the UAE resumed trades post-Eid at largely stable prices. Demand from Pakistan was steady but with the decline in shredded prices, buyers could opt for shredded instead of HMS. The daily Davis Index for UAE-origin HMS 1&2 (80:20) settled unchanged at $500/mt cfr port Qasim. Trades for UAE-origin mixed #1 HMS and P&S at $510/mt cfr Port Qasim.


The daily index for US-origin HMS 1&2 (80:20), Monday, settled unchanged at $497.5/mt cfr Port Qasim. Containerized export offers stabilised after successive drop on the US East Coast. Yet, there is a potential for a $20-30/nt drop in the US domestic prices for August settlements.  


Most large scale steel producers including Mughal, Amreli, Agha and Kamran Steel have hiked rebar prices further on high input costs and recovering steel demand. On Monday, Rebar G-60 offered at PKR165,000-170,000/mt ex-works depending on origins. Prices rose upto PKR5,000/mt boosting sentiments. Meanwhile, high construction cost has pressured builders and contractors to maintain their projects funds within predefined budgets.    


On Friday, major HRC producers including ISL and Aisha Steel hiked CRC and HDG prices by PKR5,850/mt ($36/mt). Effective July 30, mills would offer CRC at around PKR228,750/mt ex-works and HDG at PKR237,350/mt ex-works.  


For domestic Bala billet, offers were stable at PKR137,500-138,000/mt ex-works. For Art Q toke scrap (equivalent to a mix of HMS and P&S) prices were PKR101,500-102,000/mt ex-yard Lahore. Following rebar prices, most domestic scrap yards target jump in prices by minimum of PKR2,500/mt in the coming couple of days.  




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