India: SteelMint's scrap index drops INR 300/t d-o-d on weak demand

SteelMint's domestic steel scrap (end-cutting) index dipped by INR 300/t to INR 39,000/t DAP Mandi Gobindgarh on 17 Oct, 2023. Scrap purchasing activity in the market was moderately subdued compared to the previous day. Furthermore, the ongoing liquidity issues in the region can be linked to the decreased demand for finished steel.

Today, steel ingot prices in Mandi decreased by INR 200/t to INR 44,700/t at the time of reporting and price normalisation. Meanwhile, prices in other key markets decreased by up to INR 600/t. The market observed limited demand in both semi-finished and finished steel materials. According to market sources, liquidity issues are exerting pressure on steel trade activities.

Overview of other markets-

Alang : Ship-breaking melting scrap prices in Gujarat's Alang market decreased by INR 400/t d-o-d on 17 Oct'23, as per SteelMint's assessment. HMS (80:20) prices were assessed at INR 37,700/t exy. Lack of trade in semi-finished and finished steel in yesterday's trading session, coupled with limited buying enquiries for scrap, forced suppliers to reduce their offers today.

Chennai: In the Chennai market, prices of semis declined by INR 500/t to INR 45,500/t, while rebar price fell by INR 300/t to INR 50,500/t. On the other hand, HMS (80:20) prices remained stable at INR 33,900/t. Limited demand for finished steel is exerting pressure on manufacturers to reduce the prices of both semi-finished and finished steel. Mill owners are opting to purchase domestic scrap over imported scrap since domestic scrap is more cost-effective.

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-$392/t, which equates to approximately INR 34,800/t (including freight). Meanwhile, in Mumbai, local scrap prices stood at INR 35,500/t, stable d-o-d.

The demand for imported scrap in India remained muted today. Offers for shredded scrap from Europe were heard between $405-410/t CFR Nhava Sheva, while buyers bid were assessed around $400-405/t CFR levels.

HMS (80:20) scrap from Europe hovered around $390/t CFR Nhava Sheva. In the local market, particularly in eastern region, steel mills have accumulated ample inventory and reduced their production rates by 40-50%. Consequently, they are hesitant to acquire new raw materials, leading to a decrease in scrap consumption in the industry.

Raipur sponge iron-billet spread: The current conversion spread (margin) from pellet-based DRI (P-DRI) to steel billets in Raipur stands at INR 13,800/t.

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