India: SteelMint's ferrous scrap index rises by INR 700/t w-o-w amid supply crunch

SteelMint's domestic steel scrap (end-cutting) index increased by INR 200/tonne (t) d-o-d to INR 38,800/t DAP Mandi Gobindgarh on 16 December, 2023.Compared to the prices from the previous week, there was an increase ranging from INR 700/t to 800/t. Additionally, a scarcity of scrap persisted in major markets, even as mills continued to acquire scrap at substantial levels during the current week.

Steel ingot prices in Mandi Gobindgarh rose by INR 150/t to INR 43,300/t at the time of reporting and price normalisation. Prices in almost all key markets increased in the range of INR 100/t. In Mandi Gobindgarh, there was a weekly uptick in the prices of both semi-finished and finished steel. Nevertheless, the market has experienced a recent slowdown attributed to sluggish trading in the steel sector. Furthermore, the presence of income tax raid concerns has contributed to a subdued atmosphere in the market over the past few days.

Overview of other markets

Ship-breaking melting scrap prices inched down further by INR 200/t d-o-d in Gujarat's Alang market on 16 December. SteelMint assessed opening prices of HMS (80:20) at INR 35,500/t ex-yard. The slight drop in scrap prices was due to subdued demand and a fall in semi-finished steel prices in yesterday's trading session in the region.

Imported scrap market

In the Indian market this week, there was a notable disinterest among buyers in booking imported scrap. This lack of enthusiasm can be attributed to the presence of cost-effective alternatives within the domestic market and the fact that buyers already possess substantial stocks that are expected to last until mid-January. Additionally, the arrival of previously booked materials, secured at lower prices compared to current levels, has further contributed to buyers adopting a cautious stance and refraining from active participation in new bookings.

A trader commented, stating, "The Indian market is relatively quiet, with buyers holding substantial inventory, leading to a limited number of inquiries. Additionally, there is a preference among buyers for materials that were booked earlier and are currently arriving."

Notably, only 250 t of shredded scraps were booked from the UK at around $410/t CFR west coast, and around 1,200 to 1,300 t of HMS (80:20) were booked from the UK and West Africa at $394-$415/t CFR. Additionally, 500 t of CR busheling scraps were booked from Germany at $440/t CFR, and 1,000 t of bonus scraps were sealed at $415/t CFR from the US.

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 $396-$400/t, which equates to approximately INR 35,416/t (including freight). Meanwhile, in Mumbai, local scrap prices stood at INR 34,000/t, stable d-o-d.

Raipur sponge iron-billet spread: The current conversion spread (margin) from pellet-based DRI (P-DRI) to steel billets in Raipur stood at INR 13,050/t.

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