India: BigMint's ferrous scrap index continues to improve amid positive market sentiments

• Raw material prices go up by INR 700-800/t d-o-d
  
  
• Semis, finished steel offers rise INR 200-300/t today
  
  

BigMint's domestic end-cutting scrap index, tracking the Mandi Gobindgarh market, climbed up by INR 200/tonne (t) to INR 38,200/t DAP.

The Mandi steel market continued to experience positive trends, driven by decent demand and optimism regarding prices. Mills are hoping for an uptrend in steel prices, with ingot offers expected to touch INR 43,000-44,000/t.

A mill owner shared that they are constantly sourcing both domestic scrap and sponge iron for their steel production. However, ongoing GST checks at various borders in Mandi have disrupted the arrival of scrap. Sponge suppliers have capitalised on the resultant shortage of scrap by raising their prices, especially as iron ore prices have risen in recent days.

"Major mills are maintaining full production levels due to a surge in TMT demand in the last two weeks of September. Additionally, traders are in restocking mode, anticipating a healthy increase in demand in the coming days. Many mills have successfully alleviated their inventory pressures recently," a mill owner informed BigMint.

Raw materials overview

Sponge iron (CDRI) prices experienced a healthy increase, rising by INR 700/t to INR 31,700/t DAP in Mandi. Similarly, in Ludhiana, pig iron (steel-grade) prices surged INR 800/t to INR 40,000/t DAP.

Steel market trends

In the Mandi region, steel ingot prices rose INR 300/t to INR 43,600/t during the price reporting and normalisation phase. Meanwhile, prices in other key markets increased by INR 200-1,100/t. The Mumbai steel market experienced a noteworthy increase today, with semi-finished steel prices climbing by INR 1,100/t.

Rebar (Fe500) prices in Mandi increased by INR 200/t to INR 48,300/t, with moderate trade observed in the region.

Overview of other markets

Prices of rebars (Fe 500) on the Mumbai IF route increased by INR 700/t to INR 47,100/t exw amid robust trades in the market for finished steel.

Additionally, billet offers went up by INR 1,100/t d-o-d to INR 43,300/t DAP, while scrap (HMS 80:20) stood at INR 33,000/t DAP. The conversion spread between scrap and billets is at around INR 10,300/t.

Demand from the project segments has increased post-monsoon. Additionally, the market was supported by rising raw material prices, which created positive market sentiments. As manufacturers had earlier sold sufficient material and were no longer under inventory pressure, they hiked their offers.

On 30 September 2024, the Alang market in Gujarat experienced a decline of INR 200/t in ship-breaking scrap prices. BigMint reported that HMS (80:20) prices were at INR 35,000/t ex-yard. Some need-based purchasing was reported in the semi-finished and finished steel segments during the last trading day. Additionally, moderate trading activity in scrap prompted suppliers to reduce their prices today.

Price highlights

End-cutting-billets spread: In Mandi, the end-cutting scrap and billet spread was at INR 5,400/t.

Domestic vs imported scrap: Imported melting scrap prices at Nhava Sheva Port were at $375-$380/t, which equates to approximately INR 34,037/t (including freight). Local scrap HMS (80:20) prices in Mumbai remained steady at INR 33,000/t DAP. In India, indicative prices of shredded scrap from Europe stood at $395-$400/t CFR Nhava Sheva.

Demand for imported scrap was moderate. Although inquiries increased over the past few days, they have not yet translated into actual transactions due to caution among buyers.

Market participants indicated that domestic raw material prices were firm, which is expected to push scrap prices upward. While prices saw a slight rise, business activity did not pick up, mainly due to market uncertainties. Despite this, traders and suppliers remained optimistic, anticipating a surge in steel demand ahead of Diwali and the festive season.

Raipur sponge iron-billet spread: The current conversion spread (margin) between pellet-based DRI (P-DRI) and steel billets in Raipur stood at INR 13,100/t.

To check BigMint's melting scrap assessment, pricing methodology, and specification documents, click here.