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

South Korean mills decided to postpone containerised bookings following a drop in imported scrap prices to Taiwan. Leading steelmakers have bought bulk cargoes and domestic scrap at lowered prices last week. Traders opine mills could announce bids for Japanese scrap late this week.


Following lower Turkish bulk prices, South Korean mills are waiting for Chinese steel to stabilise before they book more ferrous scrap from the seaborne markets. Fall in iron ore and other raw material prices also negated sentiments. However, traders said there is very limited downside left and scrap prices are nearing their bottom in Asia. Prices could rise led by a recovery in demand before they drop again from mid-April when Ramadan lull weighs in.


Mills stayed away from containerised purchases and preferred negotiating for bulks from Japan and the US. In the bulk market, over 75,000mt of HMS from the US west coast was booked last week at $431-432/mt cfr South Korea. Japanese small bulk for H2 was offered at $425-430/mt cfr South Korea, however, mills expected prices to fall further.


Many US-based exporters are worried about supplying containerised scrap on schedule due to the low availability of empty containers. Amid rising freight rates, suppliers hope ferrous scrap prices have bottomed out.


The Davis Index for containerized HMS 1&2 (80:20), Wednesday, fell by $19/mt from the prior week to settle at $385/mt cfr South Korea. Bids fell by $15-20/mt to $380-385/mt cfr South Korea, with very limited offers in the market. Most traders and sellers are not able to get material due to a mismatch between offers and bids. A few suppliers, who are trying to clear off inventory, sold material while the rest resisted lower bids.


The Davis Indexes for P&S 5ft and #1 HMS, Wednesday, fell by $18/mt and $13/mt from prior Wednesday to $413/mt and $391/mt cfr South Korea, respectively. The index for shredded fell by $17/mt to $403/mt from the prior week.


Domestic scrap prices in South Korea trended down for the second week with mills cutting domestic scrap bids by KRW10,000-15,000/mt ($9-13/mt) effective Monday. Major mills have booked bulk tonnages from the US and Japan, limiting domestic scrap demand. But mills could reduce bids further in the latter part of the week and purchase domestic material for immediate requirements.


The weekly Davis Index for domestic Heavy A fell by KRW15,000/mt to KRW412,500/mt ($365/mt) and KRW430,000/mt delivered Incheon and Pohang, respectively. Mills have enough inventory for March and are cautious of new bookings, said traders.


($1=KRW1,128.5; JPY109)

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