India: Chennai's ferrous scrap prices slide by INR 700/t w-o-w on lacklustre steel demand - 12 Dec

• Ongoing rainy season slows down scrap market

  
  
  

• Steel trades may stay moderate throughout Dec
  
  

According to BigMint's latest assessment, HMS (80:20) prices dropped INR 700/t w-o-w to INR 31,300/t in Chennai, India. However, prices remained unchanged d-o-d. Similarly, billet tags decreased by INR 300/t w-o-w to INR 41,500/t while remaining stable d-o-d. Rebar also dropped by INR 400/t w-o-w to INR 45,800/t, with a decline of INR 200/t d-o-d.

The market is cautious, with trade activity remaining at an average level. Additionally, steel demand has been subdued, largely due to the impact of frequent rains.

Imported, domestic market trends

According to a scrap trader, shredded offers from Australia are currently at approximately $370/t CFR Chennai, while offers for EU-origin material are slightly higher at around $380/t. Meanwhile, HMS (80:20) offers are at around $355/t for Australian-origin material. However, buyers are showing reluctance to purchase at these prices, amid expectations of further declines.

In the domestic market, prices of HMS (80:20) were recorded at INR 31,000-31,500/t for buyers offering payment within seven days. For extended payment terms, prices rose to INR 31,500-31,800/t. Most offers remained stable within the INR 31,000-31,500/t range, and transactions predominantly occurred at this level. Market participants are exercising caution, with bids being aligned according to liquidity conditions and payment schedules.

Buyer-supplier sentiments

A mill representative informed BigMint, "Demand for finished steel remains subdued due to the ongoing rainy season, with buyers opting for need-based procurement rather than bulk purchases. However, demand from project-related requirements remains at a moderate level. The current liquidity crunch is also impacting trade activities within the market."

A scrap supplier noted, "HMS (80:20) scrap is currently at INR 31,000-31,500/t, depending on payment terms. Trade activities have almost come to a halt due to the ongoing rainy season, with the primary challenge being the loading and unloading of scrap. Although the monsoon season is nearing its end, the market outlook suggests that steel trades will remain moderate throughout December."

Regional comparison

In the Jalna market of western India, billet prices remained stable d-o-d at INR 40,700/t, while rebar saw an increase of INR 300/t d-o-d to INR 46,800/t. Conversely, HMS 80:20 prices saw a slight decline of INR 100/t d-o-d to INR 31,800/t.

The market experienced moderate trade activity in finished steel today, with scrap prices remaining range-bound d-o-d. Most buyers' bids for scrap were in the range of INR 31,500-32,000/t. The liquidity crunch and slow lifting of finished steel placed pressure on trade activities.

Outlook

With the rainy season still affecting the region, steel demand has slowed considerably. However, scrap prices are expected to stay within a narrow range, with minor fluctuations of INR +/- 500/t in the near future, depending on prevailing market conditions.