India: SteelMint's scrap index drops INR 400/t d-o-d on weak demand

SteelMint's domestic steel scrap (end-cutting) index dipped INR 400/t d-o-d to INR 39,000/t DAP Mandi Gobindgarh on 13 October, 2023. The scrap market witnessed a continuous decline in prices, while mills are procuring domestic scrap in moderate quantities. Sponge iron (CDRI) prices fell by INR 300/t to INR 35,000/t, while steel-grade pig iron prices fell by INR 100/t to INR 41,500/t today.

Dull steel demand and an expanding credit gap have impacted trade flow in Mandi Gobindgarh. This is evident as steel ingot prices declined by INR 300/t, reaching INR 45,000/t d-o-d, down INR 1,450/t w-o-w. Likewise, scrap prices have fallen by 1,400/t over the week.

"Steelmakers in the region face challenging times as they are forced to sell their products at significantly reduced prices due to sales pressures, all the while grappling with liquidity issues," a manufacturer source informed SteelMint.

Overview of other markets

On 13 October, the Alang market in Gujarat reported a d-o-d drop of INR 500/t in ship-breaking melting scrap prices, with HMS (80:20) prices settling at INR 37,800/t exy. A reduction of INR 400-600/t in semi-finished steel prices coupled with tepid scrap demand influenced suppliers to cut their offers.

The Chennai market saw subdued demand for both semi-finished and finished steel products. Billet prices in the region dipped INR 500/t to INR 45,500/t, while rebar prices stood at INR 50,800/t, stable d-o-d.

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 $392-$395/t, which equates to approximately INR 35,088/t (including freight). Meanwhile, in Mumbai, local scrap prices stood at INR 35,500/t, down INR 500 d-o-d.

In the Indian imported ferrous scrap market, suppliers held prices steady, while buyers offered lower bids. Bids for shredded scrap are at around $405/t, while offers range from $410-412/t. Shredded scrap from the US is also at about $405/t, and HMS (80:20) from Australia and Poland is priced at $395-400/t. Several factors are impacting prices such as war in the Middle East, a downward trend in the Turkish market, limited demand, and tight money market conditions.

As per market participants, there is reduced demand for sponge DRI in the eastern and south western regions, impacted by sluggish rebar/construction steel demand. Although some positive correction is expected next week, it may not follow the typical yearly trend.

Raipur sponge iron-billet spread: The current conversion spread (margin) from pellet-based DRI (P-DRI) to steel billets in Raipur stands at INR 13,450/t.

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