India: BigMint's ferrous scrap index climbs by INR 1,100/t amid supply concern

BigMint's domestic end-cutting scrap index tracking the Mandi Gobindgarh market significantly increased by INR 1,100/t to INR 39,100/t DAP on 15 July, 2024.

Factors supporting scrap prices

Several key factors are driving scrap and ingot prices upward. A significant shortage of scrap has been observed in major markets, creating supply constraints. Additionally, there have been very few imported scrap bookings since June 2024, which has particularly impacted the northern market. The monsoon season is exacerbating the situation by slowing scrap collection and disrupting transportation routes, making it more difficult for suppliers to meet demand. These combined factors are creating upward pressure on prices, with mills and traders anticipating further increases in the near term. Due to rising scrap prices the spread margin(scrap to billet)was declining in the region.

A mill owner told BigMint: "Mandi's scrap prices have increased in recent days due to tight supply as demand in semis' and finished steel was not like as improved prices of scrap. Suppliers' reluctance to sell at lower prices has created noticeable disparities between buyers and sellers. If this shortage worsens, mills are preparing to use more sponge iron, potentially adjusting the charge mix to a 60% scrap and 40% sponge ratio."

Diverge trend in raw material prices

The sponge iron (CDRI) prices in Mandi jumped by INR 400/t to INR 30,600/t DAP with active demand, while pig iron (steel grade) prices in Ludhiana saw a drop of INR 300/t today.

Steel market trends

Steel ingot prices in the Mandi Gobindgarh market surged by INR 800/t to INR 44,300/t DAP during the price reporting and normalisation phase. In other key markets, prices rose by INR 400/t to INR 1,000/t. The most notable increase was observed in the Ghaziabad steel market, where ingot prices climbed by INR 1,000/t.

Rebar(Fe500) prices in the Mandi market climbed by INR 600/t to INR 48,800/t with an average trade.

Overview of other market

BigMint's assessment showed that ship-breaking melting scrap prices in Alang, Gujarat, remained stable on 15 July, 2024, with HMS (80:20) priced at INR 35,800/t ($429/t) ex-yard. Prices of semi-finished and finished steel saw minimal change in the last trading session in the region. Moderate scrap trade activities led suppliers to maintain their offers at the same level today.

Price highlights

End-cutting-billets spread: In Mandi, the end-cutting scrap and billets spread was at INR 5,000-5,500/t.

Domestic vs imported scrap: Imported melting scrap prices at Nhava Sheva Port were at $385-$393/t, which equates to approximately INR 35,047/t (including freight), while local scrap, HMS (80:20), prices in Mumbai rose by INR 200/t to INR 32,700/t today. In India, indicative prices of shredded scrap from Europe stood at $410-$415/t CFR Nhava Sheva.

Raipur sponge iron-billet spread: The current conversion spread (margin) from pellet-based DRI (P-DRI) to steel billets in Raipur stood at INR 13,850/t.

To see BigMint's melting scrap assessment, pricing methodology and specification documents, Click here

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