India: Lacklustre steel demand continues to drag down SteelMint's scrap index

SteelMint's domestic steel scrap (end-cutting) index dipped by INR 200/t d-o-d to INR 38,600/t DAP Mandi Gobindgarh on 27 July 2023. The index dropped bearish sentiments caused by dull trading activity in the semi-finished and finished steel markets.

The scrap market was quiet today, with traders dealing in limited volumes. Only the mills who are in an urgent need sourced scrap to continue operations. That apart, no significant transactions took place.

Steel ingot prices in Mandi remained unchanged d-o-d at INR 43,700/t at the time of reporting and price normalisation. Meanwhile, prices in the other key markets decreased by up to INR 100-200/t d-o-d. The market witnessed subdued buying as buyers remained silent on hopes of further price corrections.

Imported scrap market

The Indian imported scrap market was impacted by increasing preference for sponge iron. According to sources, moderate transactions were seen in the domestic sponge iron market. This led to a decline in bids for imported scrap, thereby exerting further pressure on suppliers to lower their offers. Buyers were expecting further price corrections, but sellers were reluctant to lower offers further. "Steel mills are eyeing below $400/t to source imported shredded scrap," a steel producer said.

Overview of other markets

• Alang: Ship-breaking melting scrap prices in Gujarat's Alang market edged up by INR 200/t d-o-d on 27 Jul'23. As per SteelMint's assessment, HMS (80:20) prices stand at INR 36,300/t ex-yard. Scrap suppliers increased their offers on decent demand from Bhavnagar-based induction furnace steel mills along with moderate trade in semi-finished steel.
  
  
• Durgapur: IF-route steel (semi-finished and finished longs) market did not see any improvement in prices. Negative sentiments in the eastern region market weighed on buying activity as buyers were cautious to purchase amid the highly volatile situation. Prices may extend losses until finished steel demand improves.
  
  

Price highlights

• End-cutting-billets spread: In Mandi, the end-cutting scrap and billets spread stood at INR 5,000-5,500/t.
  
  
• Domestic/imported scrap price gap: Imported melting scrap prices at Nhava Sheva Port were at around $382-$390/t, which equates to approximately INR 34,160/t (including freight). Local scrap (HMS 80:20) prices in Mumbai stood at INR 33,600/t.
  
  
• Raipur sponge iron-billet spread: The current conversion spread (margin) from pellet-based DRI (P-DRI) to steel billets in Raipur stands at INR 13,850/t.
  
  

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