India: Ferrous scrap prices remain stable in Chennai - 2 Jan

• Semi-finished steel prices increase d-o-d
  
  
• Liquidity constraints lead to sluggish trade
  
  

BigMint's latest assessment indicates that HMS (80:20) scrap prices in Chennai remained stable at INR 30,700/t, with no changes observed on a d-o-d or w-o-w basis. Billet prices, however, increased by INR 500/t, reaching INR 42,000/t on both d-o-d and w-o-w basis. In contrast, rebar prices fell by INR 300/t d-o-d to INR 45,500/t while dropping by INR 500/t w-o-w.

Imported, domestic market trends

A scrap trader informed that shredded scrap offers from Australia and Malaysia are currently at $375-377/t CFR Chennai. Offers for HMS 80:20 are around $365-366/t, while a recent 500 t deal of African-origin LMS bales was concluded at $325/t CFR Chennai. At these levels, there is a lack of significant buying interest in the market.

In the domestic market, HMS (80:20) scrap prices ranged between INR 30,500-31,000/t for buyers making payments within seven days. For those choosing extended payment terms, prices rose to INR 31,000-31,500/t. The majority of offers were concentrated within the INR 30,500-31,000/t range, with most transactions taking place at these prices.

Buyer-supplier sentiments

A mill representative informed BigMint that finished steel demand remains at a subdued level, with buyers avoiding bulk purchases and focusing solely on need-based procurement. However, demand driven by project-based requirements is being observed currently.

A market source noted that the supply of rebar has been disrupted as major distributors are on holidays affecting the distribution and liquidity flow in the market. Additionally, with the upcoming Pongal festival, the market is expected to remain quiet from 10-18 January further impacting trade activities during this period.

A scrap supplier reported that HMS 80:20 scrap prices are currently between INR 30,500 and INR 31,500/t depending on payment terms. The market is facing a liquidity crunch, resulting in slower trade activity in recent weeks. Furthermore, sponge consumption in the charge mix is around 25-30%.

Regional comparison

In the Jalna market in western India, billet, rebar, and HMS 80:20 prices remained stable on a d-o-d basis, assessed at INR 42,100/t, INR 47,200/t, and INR 32,300/t, respectively. Trade activity in finished steel has been moderate since last week, with persistent liquidity crunch seen in the market. Major buyers have been bidding for scrap at INR 32,000-32,500/t.

Outlook

With scrap prices are already at their lowest levels and finished steel demand remains subdued, prices are expected to remain stable in the near term fluctuating in the range of INR +/- 500/t.