India: SteelMint's scrap index drops INR 200/t d-o-d on weak demand

SteelMint's domestic steel scrap (end-cutting) index recorded a decline of INR 300/t to INR 38,000/t DAP Mandi Gobindgarh on 25 November 2023. The prices of ferrous scrap marked a significant drop of INR 200-400/t on the day. In the region, the scrap market experienced moderate trading, with a persistent shortage of scrap resources posing challenges in the primary market. Trading activity in both the semi-finished and finished markets was down today.

Today's update reveals a decrease in steel ingot prices in Mandi Gobindgarh, down by INR 200/t to INR 43,600/t during the reporting and normalization process. Prices in almost all prominent markets have witnessed declines ranging from INR 100-300/t. The steel market in Mandi Gobindgarh is currently characterized by a sluggish trade pace, with buyers maintaining a quiet and unresponsive approach in both trading sessions.

Weekly steel market

In the Mandi Gobindgarh steel market, a mixed trend persists, characterized by a lack of significant trade improvements throughout the week. The existing trade flow in the region is subdued, but there is anticipation for a potential upswing in the last week of the month. Major mills are maintaining substantial inventories, anticipating the resumption of market activity. However, standalone small mills are currently facing difficulties, particularly in managing conversion spread costs and sourcing scrap.

Weekly imported scrap market

In India, the demand for imported scrap in containers remained sluggish as buyers favoured cost-effective domestic sourcing. The gap between seller's prices and buyer's bids dampened demand, though a few bulk bookings were noted.

Fresh shipments are expected at Chennai Port in mid-December. Some recent transactions include 2,000 t of HMS (80:20) scraps from Europe at $395/t CFR Mundra and 9,500 t NTP scraps from Italy/Europe at $420-425/t CFR Chennai.

A trader mentioned, "At present, we are not inclined to securing new material due to our existing substantial inventories. The materials booked in the August-October period are anticipated to be delivered, and we are well-supplied until January. Additionally, financial constraints are a consideration. Therefore, we plan to recommence purchasing in December for shipments scheduled for February and March."

A Gujarat-based steel mill booked 36,000 t of mix scrap from the US at an average of $427/t CFR Kandla.

Overview of other markets

Gujarat's Alang market witnessed a decline of INR 200/t in ship-breaking melting scrap prices on 25 November, 2023, based on SteelMint's assessment. The assessed value for HMS (80:20) reached INR 36,500/t ex-yard. The previous day saw a decrease in semi-finished steel prices in the region, coupled with limited trading in scrap at the current price level, prompting suppliers to adjust their offers downward today.

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 $390-$395/t, which equates to approximately INR 35,140/t (including freight). Meanwhile, in Mumbai, local scrap prices stood at INR 34,000/t, constant d-o-d.

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

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

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