India: Ferrous scrap prices drop INR 100/t w-o-w in Chennai as rains keep demand subdued - 5 Dec
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Semis, finished steel prices increase d-o-d
Buyer sentiments remain depressed
According to BigMint's latest assessment, HMS (80:20) scrap prices saw a w-o-w decline of INR 100/t, settling at INR 32,000/t in Chennai. However, d-o-d, prices remained stable. In contrast, billet prices experienced an increase of INR 500/t, reaching INR 41,800/t d-o-d. Rebar prices also saw a modest rise of INR 200/t, bringing them to INR 46,200/t d-o-d. Despite these price hikes in billets and rebars, demand for finished steel remains at an average level, and a liquidity crunch continues to affect the market.
Imported, domestic market trends
Shredded scrap from Europe is being offered at around $378-380/t, with workable prices around $375-376/t CFR Chennai, while Australian HMS 1 workable levels are around $365-366/t. But buyers are quoting $5-10/t below offer levels ($365-370/t for shredded and $350-355/t HMS from Europe and Australia.
The outlook remains bearish in Europe due to a drop in their domestic market demand which is pushing the export market downwards.
In the domestic market, buyer bids for HMS 80:20 scrap were observed between INR 31,500-32,000/t for payment terms within seven days. For longer payment periods exceeding seven days, prices increased to INR 32,000-32,500/t. On the supply side, offers were positioned between INR 32,000 -32,500/t. Despite the price disparity between buyer bids and supplier offers, the majority of transactions took place within the range of INR 32,000-32,500/t, indicating cautious yet stable market engagement.
Buyer-supplier sentiments
A mill representative informed BigMint, "The Fengal cyclone and heavy rainfall last week really slowed down trade for steel materials in the region. Although the floods have receded, buying activity in finished steel is still quiet. Scrap supply is moderate, and now, mill owners are offering lower prices for raw materials to manage production costs."
Another market source shared that with the rainy season nearing its end in the region, there is an expectation for positive market movement in the coming weeks. However, this recovery is anticipated to be more significant if the neighbouring states also demonstrate increased demand and improved sentiment for steel.
According to a scrap supplier, "HMS 80:20 scrap prices are ranging from INR 31,500-32,500/t based on payment terms. The market is facing a liquidity crunch, which has resulted in slower trade activity in recent weeks. Imported scrap offers are lower at the moment, but mills are still reluctant to purchase due to concerns related to tie-up of capital over long periods."
Regional comparison
In the Jalna market in western India, billet prices increased by INR 400/t d-o-d, reaching INR 41,100/t, while rebar prices rose by INR 200/t to INR 47,000/t. Meanwhile, HMS 80:20 prices edged up by INR 100/t, now at INR 32,100/t.
Over the past few days, there has been active demand for finished steel. Since Monday, rebar prices have improved by INR 1,000/t, whereas HMS 80:20 prices have seen a more modest increase of INR 200/t. Last week, mills booked significant quantities of scrap at higher prices, and now they are aiming to secure lower offers for procurement to help manage their production costs.
Outlook
As the rainy season comes to a close, the market is expected to witness some positive movement in trade activities for finished steel. However, scrap prices are anticipated to remain within a relatively narrow range, with potential fluctuations of INR +/- 500 per tonne in the near term, depending on prevailing market conditions.
