India: Chennai ferrous scrap prices stable w-o-w as rains keep steel demand subdued - 17 Oct

BigMint's latest assessment shows that HMS (80:20) scrap prices in Chennai remained steady at INR 32,200/t, with no changes on a daily or weekly basis. Rebar prices are also stable at INR 48,000/t d-o-d, though they have seen a decline of INR 500/t over the past week. Billet prices have dropped by INR 200/t to INR 44,500/t, marking a weekly decrease of INR 500/t. Heavy rains and a cyclone in the region have led to restricted trading activities in the steel market this week.

Imported, domestic market trends

Shredded scrap from the UK/EU is priced at $395-397/t CFR Chennai, while HMS (80:20) from Australia is being quoted at $370-375/t CFR, with a recent deal closed at $372/t. Busheling levels are noted at $412-415/t CFR. Despite a decline in imported scrap rates, demand remains moderate as the cyclone impacted trading conditions in Chennai, as per a mill side source.

A southern India scrap trader recently stated that they have cut their import volumes by 30%, shifting their focus toward utilising more locally sourced scrap, as it is better in quality. He noted, "We will look to increase imports in about a month, depending on our needs and the viability of prices."

In the domestic market, buyers' bids for HMS 80:20 hovered at INR 32,000-32,500/t for payment terms within seven days. Some buyers attempted to lower their bids to INR 31,500-32,000/t, citing limited demand in finished materials. However, the tight supply in domestic scrap made it difficult to acquire sufficient quantities at those lower bids. For payment periods extending beyond seven days, prices rose to INR 32,500-33,000/t. Supply offers remained between INR 32,000-33,000/t, with most transactions occurring within this range.

Buyer-supplier sentiments

A mill owner noted, "Last week's Ayudha Pooja and Vijayadashami festivals significantly limited trade in finished steel. This week, the situation worsened due to the cyclone and heavy rainfall, which nearly halted trading activities. The adverse weather conditions have impacted transportation and labour availability."

Market sources informed BigMint, "Steel sector trades have been limited since last week. With the government's early warnings about the cyclone starting from October 15, many major construction projects put their work on hold. So far, no significant improvements have been observed in the market, but there might be a pick-up in activity starting next week."

A scrap supplier said, "Scrap offers from mills remain stable. We faced challenges in supplying the full quantity due to heavy rain and transportation disruptions in the past couple of days. Now most of the water-logging and flooding has been cleared and transportation has returned to normal."

Regional comparison

In the Jalna market in western India, billet prices fell by INR 100/t to INR 43,600/t and HMS 80:20 prices decreased by INR 200/t to INR 33,300/t. while rebar prices held steady at INR 49,300/t. According to market sources, trade activity in rebar remained moderate today. Several mills secured substantial quantities of imported scrap, which have already begun to arrive. As a result, mills are not pushing for higher prices on domestic scrap purchases.

Outlook

Scrap prices are expected to remain mostly stable, with potential fluctuations of around INR +/- 500/t in the coming days. However, demand for finished steel might see some improvement next week as construction projects are expected to restart.