India: BigMint's scrap index dips INR 100/t amidst slowdown in demand
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![India: BigMint's scrap index dips INR 100/t amidst slowdown in demand](https://d199amilqw5tyr.cloudfront.net/wp-content/uploads/2024/01/Index-Graph.jpeg)
On 25 January, 2024, the index for domestic steel scrap (end-cutting) in Mandi Gobindgarh, as reported by BigMint, recorded a decrease of INR 100/tonne (t), settling at INR 37,200/t on a delivered-at-plant (DAP) basis.
In Mandi, a slight shortage of scrap is evident in the market, mainly attributed to mills' hesitancy in procuring imported scrap. Local steel scrap remains the preferred choice due to its lower cost compared to imported alternatives. Scrap suppliers face challenges in a seemingly subdued market, with mills extending payment timelines and the risk associated with booking new orders. Additionally, slow scrap arrivals are influenced by winter and fog-like conditions, impacting transportation services.
A representative from a steel mill noted, "The increasing utilization of sponge iron in Mandi suggests that it will soon fill the gap left by imported scrap. This rise in sponge iron usage signifies a shift in the market dynamics."
Semis' market
Steel ingot prices in Mandi experienced a decline, dropping by INR 200/t to INR 42,500/t during the reporting and normalisation period. Simultaneously, other significant markets also reported a decrease in steel ingot prices, ranging from INR 100 to INR 200/t.
The majority of mills in the region continue to operate at full capacity despite weak demand for finished products, resulting in a sluggish market over the past few weeks. Substantial inventories of finished items and observed delays in payments have contributed to the challenging market conditions. Despite discounted offers, the impact is limited due to subdued buyer activity, as highlighted by a mill owner to BigMint.
Raw materials price update
In Mandi, the price of sponge iron (CDRI) saw a reduction of INR 100/t, reaching INR 31,200/t. In contrast, prices for pig iron (steel grade) experienced a marginal increase of INR 50/t, reaching INR 39,550/t DAP.
Overview of other markets
BigMint's assessment on 25 January, 2024, revealed a drop of INR 200/t on d-o-d in ship-breaking melting scrap prices in Gujarat's Alang market. The prices for HMS (80:20) were evaluated at INR 33,800/t ex-yard. The subdued demand for both semi-finished and finished steel in the trading session on the preceding day, combined with limited buying inquiries for scrap in the region, resulted in suppliers reducing their offers today.
In the Jalna market, located in western India, there was a decline of INR 300/t in semi-finished steel prices, reaching INR 42,100/t, while rebar prices remained stable at INR 48,000/t ex-works. Conversely, HMS 80:20 prices dropped by INR 200 to INR 32,800/t. Trade movements in finished steel were restricted in today's trading session.
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 $392-$395/t, which equates to approximately INR 35,034/t(including freight),while local scrap-HMS (80:20)-prices in Mumbai stood at INR 33,000/t stable d-o-d.
In India, the demand for imported scrap remained muted due to the substantial price gap between domestic and imported scraps. Shredded scrap offers from Europe were in the range of $410-420/t CFR Nhava Sheva. Shredded scrap of Australian origin was observed at $435/t CFR. HMS (80:20) scraps from South America and Australia were indicated at $420/t CFR Chennai.
Raipur sponge iron-billet spread: The current conversion spread (margin) from pellet-based DRI (P-DRI) to steel billets in Raipur stood at INR 13,050/t.
To see SteelMint's melting scrap assessment, pricing methodology and specification documents, Click here
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