India: Stainless steel scrap arrival hits 8-month high amid seasonal demand

• India's SS scrap imports rise to 108,465 t in Jul'24
  
  
• Mills increase inquiries due to price reductions
  
  
• LME nickel prices drop 5% due to high inventories
  
  

India's stainless steel (SS) scrap imports saw a notable rise of 16% in July 2024, driven by seasonal demand. Additionally, imports hit an eight-month high, last seen in December 2023.

According to provisional data maintained by BigMint, India's total SS scrap imports stood at 108,465 tonnes (t) in July 2024, significantly up from 93,410 t in the previous month. However, compared to the previous year, July 2024's SS scrap imports experienced a decline of 8% from 118,520 t in July 2023.

Additionally, among the top 20 scrap importers, approximately 60% are long product manufacturers, 25% are traders, and 15% are flat product producers. The remaining importers are small-scale mills and traders, each handling less than 300 t of scrap in July 2024.

Grade-wise imports

In the scrap import segment in July, shipments of zurik grade rose by 10% m-o-m to 25,215 t. Domestic recyclers separate zurik scrap into 304 scrap and red metals, which are subsequently sold to local producers. Similarly, non-zurik cargoes witnessed an 18% increase, reaching 83,250 t.

A series-wise examination of SS scrap imports shows that the imports of the 200 series increased by a notable 33% to 9,590 t from 7,235 t in June 2024. Similarly, imports of the 300 series witnessed a 21% gain, moving to 76,615 t compared to the previous month's 63,215 t. Meanwhile, imports of the 400 series remained stagnant with a marginal rise of 1% to 15,555 t from the previous month's 15,410 t.

Factors driving scrap imports in July

Increased inquiries from mills: Steel mills have increased their focus on and inquiries for imported scrap due to a drop in scrap prices linked to falling London Metal Exchange (LME) nickel levels. Additionally, freight rates from major Southeast Asian supplier countries, which contribute around 45% of India's scrap supply, have decreased, further boosting scrap arrivals in July. Average freight rates from these regions have fallen to under $1,500 per 20 ft container, down significantly from over $4,000 per container during times of severe port congestion and container shortages.

Drop in LME nickel prices: In July, average LME nickel prices reached $16,900/t, marking a 5% decrease from the previous month's $17,770/t. This decline was largely driven by increased nickel inventories in LME-registered warehouses. Notably, nickel stocks in these warehouses jumped by 14%, reaching 100,834 t in July compared to 88,304 t the previous month.

Decline in semis imports increases scrap reliance: In July 2024, imports of the 300 series of semi-finished slabs from Indonesia dropped by 23%, leading to a greater dependence on scrap for SS production. Total imports of SS slabs fell to 38,795 t from 50,385 t the previous month.

Imported scrap price trends

The decline in LME nickel prices contributed to a drop in imported scrap prices to India. BigMint's assessment shows that in July, the average price for SS 304 scrap decreased by about 2% m-o-m, settling between $1,420/t and $1,430/t in comparison to the previous month's range of $1,450-$1,470/t. Similarly, SS 316 scrap prices fell to $2,600-$2,620/t from $2,650-$2,670/t the previous month, which further encouraged increased scrap imports.

Country-wise scrap arrivals

The United States, the largest supplier, saw a minor reduction of 0.1% in scrap exports, which decreased from 14,510 t in June to 14,495 t in July. Conversely, Thailand's exports surged by 64%, reaching 10,432 t in July. Vietnam's exports increased by 11%, climbing from 9,258 t in June to 10,301 t in July. Malaysia also saw a notable rise in scrap exports, up 38% from 6,473 t in June to 8,917 t in July.

Additionally, exports from other countries experienced a significant boost, growing by 20% in July to reach 46,630 t from 38,746 t in the previous month.

Port-wise and ICD arrival

In July 2024, the highest cargo inflow was observed at Nhava Sheva port (JNPT), which received 14,430 t. Thar ICD followed closely with 14,255 t, while Jajpur ICD in the east recorded an inflow of 13,500 t. Additionally, other ports and ICDs together saw a total inflow of 66,275 t during the same month.

Notably, the western region, a major hub for most SS finished long product manufacturers, has experienced a significant influx of scrap. This scrap is an essential raw material for producing long products.

Outlook

Looking ahead, import volumes of SS scrap are expected to remain range-bound on easing sea freight levels. Additionally, global nickel prices on the LME may experience short-term fluctuations in the near future, which has to be further monitored.