India: BigMint's ferrous scrap index continues to slide on sluggish trade - 10 Sept'24

BigMint's domestic end-cutting scrap index tracking the Mandi Gobindgarh market fell by INR 200/tonne (t) to INR 36,600/t DAP today. The market saw minimal trading activity as prices continued to fall in both the semi-finished and scrap segments.

Market response on RCM

A mill owner told BigMint: "The new government policy on the Reverse Charge Mechanism (RCM) for steel scrap has created confusion in the Mandi market, leading to a subdued trading environment. Bid-offer disparities between buyers and sellers have kept both sides on hold, resulting in a quiet market."

According to Punjab steel makers, they are pushing for a reduction in GST on steel scrap from the current rate of 18% to 5%, citing numerous operational challenges faced by mills. However, the GST on metal scrap remains at 18%, leaving steel manufacturers dissatisfied with the current policy.

Raw materials overview

Sponge iron (CDRI) prices remained stable at INR 29,800/t DAP in Mandi. Meanwhile, in Ludhiana, pig iron (steel grade) saw a notable decline, with prices falling sharply by INR 50/t to INR 38,450/t DAP.

The price trend over the last three months has shown a consistent decline.

Steel market trends

In the Mandi region, steel ingot prices dipped INR 100/t to INR 41,500/t on Tuesday during the price reporting and normalisation phase. Meanwhile, prices in other key markets fell by INR 50/t to INR 300/t. In the Raigarh market, semi-finished steel prices decreased by INR 300/t d-o-d.

In Mandi, rebar (Fe500) prices remained firm at INR 46,200/t ex-works, with market activity experiencing slightly reduced inquiries. Prices have been on a continuous decline over the past three months.

Overview of Alang market

According to BigMint's report, prices of ship-breaking melting scrap in Alang, Gujarat, stayed unchanged for the fourth day on Tuesday, with HMS (80:20) priced at INR 34,000/t ex-yard. Although semi-finished steel prices fell during the previous session, moderate scrap demand from Bhavnagar's induction furnace (IF) steel mills encouraged suppliers to hold their offers firm.

Price highlights

End-cutting-billets spread: In Mandi, the end-cutting scrap and billet spread was at INR 4,900-5,000/t.

Domestic vs imported scrap: Imported melting scrap prices at the Nhava Sheva Port were at $368-$374/t, which equates to approximately INR 33,609/t (including freight). Meanwhile, local scrap HMS (80:20) prices in Mumbai fell by INR 200/t to INR 32,500/t DAP. In India, indicative prices of shredded scrap from Europe stood around $390-$398/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 12,750/t.

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

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