India: BigMint's ferrous scrap index sinks to 2.5-year low on muted steel market sentiment

The index for domestic steel scrap (end-cutting) in Mandi Gobindgarh declined by INR 100 per tonne (t), reaching INR 36,700/t on a delivered-at-plant (DAP) basis on 10 February, 2024

The rise in sponge iron utilisation, coupled with a robust influx of scrap, has resulted in a decline in scrap prices, with end-cutting scrap prices dipping to a 30-month low, with current levels last witnessed on 25 July'2021. The majority of steel mills are anticipating that the market will either remain range-bound or experience a decline in the upcoming week.

Weekly scenario

Despite operational challenges, mills in Mandi are ensuring adequate procurement levels for domestic scrap. Nevertheless, there is a notable absence of significant trade volumes in the scrap market even as the arrival of domestic scrap has seen an improvement in recent days.

The arrival of domestic steel scrap in Mandi faced delays from mid-January due to stringent inspections by the GST team across neighboring states. However, there is now some relief visible as scrap is beginning to arrive from nearby states, a trader source informed.

Steel market

Steel ingot prices in Mandi witnessed a decline of INR 100/t, settling at INR 42,200/t during reporting and price normalization. Concurrently, prices in several significant markets also saw a decrease ranging from INR 100/t to INR 150/t today. Last couple of days have been relatively favorable in terms of trading activity in the region, but today's market is experiencing a slowdown in comparison. In the region rebar(Fe500) prices fell by INR 100/t to INR 46,700/t d-o-d.

Raw materials price update

Sponge iron (CDRI) prices in Mandi witnessed a decline of INR 100 per tonne, settling at INR 30,700 per tonne. However, pig iron (steel grade) prices remained unchanged at INR 39,400 per tonne in Ludhiana on a delivered-at-plant (DAP) basis.

Weekly price change

There was a notable decline in prices across various segments: semis (ingot) prices dropped by INR 550/t, rebar prices decreased by INR 400/t, end cutting scrap prices fell by INR 700/t, and sponge iron (CDRI) prices saw a decline of INR 500/t week-on week.

Imported scrap market weekly trend

In India, imported scrap demand remains subdued amid a stagnant steel market. Shredded scrap prices saw a slight increase to $415/t CFR Nhava Sheva, while HMS (80:20) remained stable at $397/t CFR Nhava Sheva, with a $1/t drop for West Africa to Chennai port, reaching $393/t.

Despite tepid market conditions, limited transactions occurred from Malaysia, West Africa, UK, US, and Germany. Notable deals include 1200 t of Malaysia CR Bushelings at $440/t CFR and 500 t of West Africa HMS (80:20) at $385/t CFR.

There's a noticeable price gap between domestic and imported scrap, with minimal interest in UK-origin HMS at $375/t CFR Mundra. Domestic scrap is offered at a $15-20/t discount.

Price highlights

End-cutting and 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 around $388-$397/t, which equates to approximately INR 35,146/t(including freight),while local scrap-HMS (80:20) prices in Mumbai remained stable at INR 32,500/t d-o-d.

Raipur sponge iron-billet spread: The current conversion spread (margin) from pellet-based DRI (P-DRI) to steel billets in Raipur stood at INR 13,000/t.

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