India: SteelMint's scrap index drops INR 1,100/t w-o-w on limited steel demand

On 23 December, 2023, SteelMint reported a decline in its domestic steel scrap (end-cutting) index, falling by INR 200/t (tonne) d-o-d, settling at INR 37,700/t DAP Mandi Gobindgarh. Additionally, steel ingot prices in the region experienced a decrease of INR 200/t d-o-d, reaching INR 43,200/t.

Scrap movement

In the region, mills maintain a satisfactory inventory of scrap, contributing to ample availability. However, local traders engage in lower scrap volumes due to mills experiencing slow consumption.

Mandi market: Weekly scenario

This week's outlook for the steel market is challenging, marked by mills experiencing selling pressure due to a downturn in demand. In response to these unfavorable conditions, mills are opting to acquire raw materials only when absolutely necessary. Moreover, liquidity issue persisted in the market.

Major big mills are embracing continuous production, operating 24 hours a day, while smaller mills have transitioned to a 12-hour working schedule.

Weekly price movements

Steel Ingot and end-cutting scrap prices in Mandi Gobindgarh fell by INR 1,100/t. Sponge iron (CDRI) prices decreased by INR 700/t, while rebar prices moved down by INR 600/t w-o-w.

Raw materials

Prices for sponge iron (CDRI) experienced an uptick of INR 100/t, settling at INR 32,100/t. Concurrently, pig iron (steel grade) prices in Ludhiana witnessed a d-o-d up of INR 200/t, reaching INR 39,700/t.

Overview of other markets

Ship-breaking melting scrap prices in Gujarat's Alang market inched up by INR 100/t d-o-d on 23 Dec'23, as per SteelMint's assessment. HMS (80:20) prices were assessed at INR 35,100/t exy. The increase in scrap prices was backed by good demand from Bhavnagar-based IF steel mills. The semi-finished steel market also remained supportive with moderate trading.

Imported scrap weekly market

The demand for imported scrap in India remained subdued throughout the week due to discrepancies in prices and the presence of previously committed materials. The weekly average offers for shredded scrap from Europe recorded at $414/t CFR Nhava Sheva reflected a decrease of $11/t compared to the previous week's $425/t CFR.

A spokesperson from a trading company commented on the current market situation, stating, "The market is currently undergoing a significant downturn. There is an oversupply of distressed cargo for sale, and buyers are exercising caution, showing reluctance to engage at higher price levels."

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 $386-$390/t, which equates to approximately INR 34,619/t (including freight). Meanwhile, in Mumbai, local scrap prices stood at INR 33,500/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 12,950/t.

To see SteelMint's melting scrap assessment, pricing methodology and specification documents, Click here

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