India: Imported scrap market quiet on preference for domestic substitutes

India's imported scrap offers have remained largely unchanged against last week, despite drop in bids. Deals for smaller lots of shredded in containers from USA were heard at $545/t CFR NHSV basis. Fresh offers for UK-origin shredded scrap are being quoted at $550-555/t CFR Nhava Sheva, largely stable w-o-w.

UAE-origin HMS 1 in containers is being offered at $485/t CFR levels. However, no major deals were heard in the last couple of weeks.

"Global scrap prices have softened now as Turkish mills resume bookings for Jan'22 shipments. The suppliers are showing more interest in other active buying countries like Pakistan on better price acceptance. On the other hand, bid-offer disparities have kept Indian buyers away from the imported scrap market," said a participant from a global trading company.

Local-imported scrap spread widens: Simultaneously, most of the buyers and furnaces feel local scrap prices are more feasible than imported. SteelMint's assessment for HMS (80:20) was recorded at INR 35,700/t ($475/t) DAP Mumbai, a decline of INR 200/t ($3/t), while prices for Jalna were at INR 35,500/t DAP ($473/t), up by INR 400/t ($5/t) w-o-w.

On the other hand, price indications for Dubai-origin HMS (80:20) stand at around $475-480/t, CFR Nhava Sheva. Whereas, landed cost for the imported scrap to Mumbai comes to around INR 38,000/t. Thus, imported scrap is costlier by around INR 2,000/t over domestic.

Sponge iron, P-DRI (FeM 80%), prices fell by INR 1,700/t w-o-w to INR 27,100/t exw-Raipur. Sources are expecting prices to fall again and supply to improve as iron ore lump and pellet prices have declined, while demand stays subuded.

Bearish sentiments in Indian steel market: There was lack of demand for semi-finished steel and drop in raw material (iron ore and pellets) prices amidst a sharp correction in sponge iron prices mid-week. However, western India-based markets witnessed a marginal uptick in prices on account of improved steel transactions. Prices may vary in the short term, trade participants said .

IF (Fe 500) re-bar trade and demand were impacted due to fall in semi-finished steel prices in the key markets, which pressurised rebar sellers to adjust their trade prices by INR 200/t ($3/t) w-o-w, to INR 48,600/t ($647/t) exw-Mumbai. Fall in raw material prices made traders cautious on procuring material, SteelMint learned from sources. However, spot trading activity remained weak and low future bookings forced traders to offer discounts.

Outlook

Most of the UK/EU yards get closed for winter holidays, hence the scarcity in scrap may occur in the near future, and prices are likely to go up. However, market insiders are waiting for clear market directions and prices to come down further.