India: BigMint's ferrous scrap index drops to 5-month low - 9 Aug'24

• Raw material prices drop in Mandi
  
  
• Semis, finished steel prices dip INR 400-500/t d-o-d
  
  

BigMint's domestic end-cutting scrap index tracking the Mandi Gobindgarh market dipped INR 500/t to INR 36,400/t DAP on 9 August, 2024. Scrap prices in the region have dropped to a five-month low and suppliers are concerned that further price decline may lead to supply shortage, putting further pressure on the market.

The main factor behind the decline in prices is sluggish demand for steel across the board, compounded by the softness in finished steel and bid disparities between buyers and sellers. Additionally, the export market has also experienced a slowdown, contributing to the overall downward trend, while mills are still hoping for some positive shift after monsoon or within a few weeks.

A mill owner informed: "Most steel mills in Mandi believe that prices for semi-finished and finished steel have likely hit the bottom. This sentiment stems from ongoing production cuts and reduced workweeks, with mills operating just four-five days due to weak demand and price disparities. Despite facing several challenges, mills expect that Mandi ingot prices will stabilise at around INR 41,000/t-42,000/t in the near term".

Raw materials overview

Sponge iron (CDRI) prices decreased by INR 200/t to INR 29,800/t today. Meanwhile, in Ludhiana, pig iron (steel grade) prices moved down by INR 250/t to INR 40,250/t DAP.

Steel market trends

In the Mandi region, steel ingot prices fell by INR 500/t to INR 42,400/t today during the price reporting and normalisation phase. Meanwhile, prices in other key markets fell by INR 100/t to INR 600/t. The Ahmedabad steel market experienced the most significant price drop, with a decrease of around INR 600/t d-o-d.

Rebar (Fe500) prices in Mandi fell by INR 400/t to INR 46,500/t today with limited trade activity.

Overview of other markets

In Chennai, billet prices are holding steady at INR 43,000/t, but rebar has dipped by INR 200/t, now at INR 47,500/t. HMS 80:20 is down INR 100/t and is assessed at INR 32,000/t. According to market sources, trade activities for both semi-finished and finished steel remain subdued. Mills are offering lower prices for domestic scrap, but acquiring it at competitive rates is still difficult.

Price highlights

End-cutting-billets spread: In Mandi, the end-cutting scrap and billet spread was at INR 4,800-5,000/t.

Domestic vs imported scrap: Imported melting scrap prices at Nhava Sheva Port were at around $380-$387/t, which equates to approximately INR 34,702/t (including freight), while local scrap, HMS (80:20), prices in Mumbai remained constant at 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 14,000/t.

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