India: SteelMint's ferrous scrap index increased by INR 1,000/t w-o-w

SteelMint's update on 12 December,2023, indicated a d-o-d increase of INR 300/t in the domestic steel scrap (end-cutting) index, bringing it to INR 38,500/t DAP Mandi Gobindgarh. The Mandi steel market experienced moderate demand in both trading sessions from past couple of days. Noteworthy is the continued significant procurement of domestic scrap by mills, even in the face of a prevailing shortage in major markets. Although scrap prices improved by INR 1,000/t to INR 1,200/t on a weekly basis.

"Small standalone mills are encountering a challenging period, primarily due to a decrease in the conversion margin from scrap to ingot, exacerbated by rising scrap prices. The current scenario, where scrap prices are on the upswing, is adding pressure to the operational dynamics of these mills. The diminished conversion margin poses difficulties for small mills in sustaining profitability as they face the dual challenge of higher input costs and a competitive market environment". A mill owner sourced SteelMint.

Steel market

Steel ingot prices in Mandi increased by INR 200/t to INR 44,000 t at the time of reporting and price normalisation. Meanwhile, prices in other key markets increased by INR 200/t-300/t. The semi-finished and finished steel market in Mandi Gobindgarh experienced decent trade activity today, with no significant improvements from yesterday. Although prices may have shown an upward trend, the overall level of business remained moderate. Rebar prices increased by INR 200/t to INR 48,400/t today.

Overview of other markets

The Alang market in Gujarat witnessed a d-o-d increase of INR 200/t in ship-breaking and melting scrap prices on 12 December, 2023, according to SteelMint's assessment. HMS (80:20) prices were evaluated at INR 36,700/t ex-yard. The upswing in scrap prices was driven by a strong demand from Bhavnagar-based IF steel mills. Additionally, the semi-finished steel market sustained its positive trend with moderate trading activities.

Experiencing a slight d-o-d increase of INR 100/t, Mumbai's IF route Rebar (Fe 500) prices now stand at INR 49,200/t ex-works. The spot market observed subdued trading activities. Presently, billet prices are at INR 43,500/t, and Scrap (HMS 80:20) is priced at INR 34,300/t DAP. The conversion spread from scrap to billet is around INR 9,200/t.

Price highlights

End-cutting-billets spread: In Mandi, the end-cutting scrap and billets spread stood at INR 5,500-6,000/t.

Domestic vs imported scrap: Imported melting scrap prices at Nhava Sheva Port were at around $400-$405/t, which equates to approximately INR 35,964/t (including freight). Meanwhile, in Mumbai, local scrap prices stood at INR 34,300/t, stable d-o-d.

In India, current situation witnessed a wait and watch mode with indicative prices for shredded scrap from Europe were reported at $425-$428/t CFR, while from the United States offers were at $422-$424/t CFR.

As per market sources, Imported ferrous scrap prices remain high but undoubtedly fewer actions have been taken against this price, port activities have been partially resumed after the cyclone hit, currently not a great environment for buyers if they consider a viable price range in the market to get materials

Raipur sponge iron-billet spread: The current conversion spread (margin) from pellet-based DRI (P-DRI) to steel billets in Raipur stood at INR 13,150/t.

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