India: Stainless steel scrap prices fall w-o-w despite rise in LME nickel levels

• Demand for finished goods weak post-New Year
  
  
• Indonesia proposes 40% cut in nickel mine quotas
  
  

India's domestic and imported stainless steel (SS) scrap prices declined w-o-w due to subdued demand for finished goods following the New Year holidays. Despite a 3% w-o-w rise in London Metal Exchange (LME) nickel prices, the SS scrap market weakened, failing to rebound after the holiday period.

As per BigMint's assessment, domestic 304-grade SS scrap stood at INR 118,000/tonne (t) ($/t) ex-Delhi, while the imported variant of the same, originating from the nearshore region, was priced at $1,310/t CFR Mundra.

A source from BigMint stated, "We are maintaining a healthy inventory of finished goods. Sluggish demand in the finished goods sector has made us avoid procuring both domestic and imported scrap. With our current inventory acting as a sufficient buffer, we continue to monitor the market closely."

LME nickel prices rise 3% w-o-w

At the time of reporting, three-month LME nickel prices stood at $15,505/t, up by 3% from last week's $15,000/t. Meanwhile, nickel stocks in LME-registered warehouses remained stable at 164,310 t, a marginal increase from the previous week's 164,028 t.

Notably, Indonesia's rapid production expansion has kept the market oversupplied, exerting pressure on prices. However, the Indonesian government plans to cut nickel mine quotas by 40%, which could have a substantial impact on global supply. The government's cuts could reduce Indonesia's nickel production from 272 mnt in 2024 to as low as 150 mnt in 2025.

Market insights

BigMint's assessment indicates that imported 316-grade SS scrap prices fell to $2,520/t, marking a w-o-w decline of $30/t. Suppliers offered the material at $2,540-2,550/t, while buyers' bids hovered at around $2,500-2,510/t.

As for other grades, 430-grade SS scrap was priced at $600/t, and the 201 variant stood at $695/t CFR Mundra.

A trader stated, "The market has not recovered as expected after the New Year holidays. Demand remains weak, though there is cautious optimism for a rebound towards the end of January. Market participants also expect potential demand-boosting measures in the Union Budget for February 2025."

China's SS demand to grow in 2025

In January 2025, China introduced policies to boost SS demand, focusing on equipment upgrades and recycling initiatives. Consumption is projected to grow 3.5% to 27.07 mnt, with significant demand increases in home appliances, electronics, and agriculture. Recycling efforts are expected to drive modernisation, supporting sustainable growth and solidifying stainless steel's role in diverse industries.

Outlook

In the short term, SS scrap prices could see a modest uptick as LME nickel prices stabilise, aided by Indonesia's proposed mining quota cuts. However, any price recovery is expected to be short-lived, contingent on demand improvement in the finished goods sector.