India: Chennai's ferrous scrap prices drop INR 200/t w-o-w on weak steel demand - 28 Nov

• Liquidity constraints lead to sluggish trade
  
  
• Buyers delay purchases amid rainy season
  
  

According to BigMint's latest assessment, HMS (80:20) scrap prices declined INR 200/tonne (t) w-o-w to INR 32,100/t. However, d-o-d, prices remained stable. Meanwhile, rebar tags were unchanged d-o-d at INR 46,000/t but saw a minor reduction of INR 300/t over the week. Additionally, billet offers held steady at INR 41,800/t, both on a d-o-d and w-o-w basis.

Despite stable pricing in certain sectors, limited demand for finished steel and a liquidity crunch dampened trade, leading to a cautious market.

Imported, domestic market trends

According to a scrap trader, shredded offers from Australia are currently at around $380-385/t, CFR Chennai, with bids at $370-375/t. Meanwhile, offers for HMS 80:20 stood at around $365-366/t. Buyers do not have any urgent requirements, so they are negotiating further, for better prices.

In the domestic market, buyers placed bids for HMS 80:20 at INR 32,000-32,500/t, with standard payment terms of seven days. For longer payment schedules, prices edged up to INR 32,500-33,000/t. Offers remained steady, and most transactions were settled within these ranges.

Buyer-supplier sentiments

A mill representative informed BigMint that trade activities have slowed down in steel in recent weeks. Both major project and retail sales have been sluggish, adversely impacting demand for finished steel. Additionally, with the ongoing rainy season in Chennai, many key buyers are postponing their procurement plans.

A market source stated that steel mills are currently unwilling to sell billets in the market due to the losses incurred from such sales. Instead, they are focused on rebar production. A persistent liquidity crunch has also dampened the overall trade dynamics in the steel industry.

According to a scrap supplier, "HMS 80:20 prices remained stable, hovering at INR 32,000-32,500/t. However, offers for imported scrap declined recently. Overall market sentiment is bearish, with this trend expected to persist in the coming weeks, as the monsoon season continues through December. Domestic scrap supply remains moderate, helping to maintain current prices and preventing significant price reductions from buyers in the near term."

Regional comparison

In the Jalna market, both billet and HMS 80:20 prices decreased by INR 100/t d-o-d to INR 41,200/t and INR 32,500/t, respectively. Rebar tags saw a drop of INR 400/t d-o-d to INR 46,300/t.

A mill representative stated, "While rebar bookings are still being made, material lifting has been slow, putting pressure on inventories. Furthermore, liquidity constraints continue to affect the market."

Outlook

As the rainy season continues in the region, steel demand has significantly slowed. Despite this slowdown, scrap prices are expected to remain within a relatively narrow range, with potential fluctuations of INR +/- 500/t in the near term, depending on prevailing market conditions.