India: SteelMint's scrap index falls by INR 2,800/t in past three weeks

SteelMint's domestic steel scrap (end-cutting) index has fallen by INR 2,800/tonne (t) in the past three weeks. Prices have come down to INR 38,900/t DAP Mandi Gobindgarh on 24 July from INR 41,700/t on 1 July. If we see on a d-o-d basis, the index has dipped by INR 400/t.

Steel mills are currently struggling with weak demand, as the construction and infrastructure sectors remain unsupportive, leading to a decrease in demand for steel scrap. The scrap market is silent as buyers are hoping for more price corrections.

Semi-finished steel market

In Mandi, steel ingot prices fell by INR 300/t d-o-d to INR 44,000/t at the time of reporting and price normalisation. Prices in almost all the key markets decreased by INR 100-300/t.

As a result of these challenges, the small mills in north India are under selling pressure and are working at very low profit margins. This situation is likely to continue in the near future, as the factors that are currently driving down the market are not expected to change in the short term.

Imported scrap market

Indian imported scrap buyers continue to book some small parcels, while some steel producers are looking for domestic substitute material at feasible prices. In addition, some deals with Australia and the USA have been concluded.

Meanwhile, some major steel producers are waiting for further price corrections.

Scrap buyers may again shift their interest to booking bulk material instead of containerised on cost-efficiency.

Overview of other markets

Alang: Ship-breaking melting scrap prices in Gujarat's Alang market edged down by INR 200/t today compared to the last trading day. Opening prices of HMS (80:20) were assessed at INR 36,300/t exy. Limited trading coupled with a fall in semi-finished steel prices in Bhavnagar put scrap offers under pressure.

Jalna:In today's Jalna market, situated in western India, the prices of semis remain steady at INR 42,000/t, whereas finished steel prices have declined by INR 100/t to INR 47,300/t. Meanwhile, HMS 80:20 prices have increased by INR 200/t, reaching INR 34,700/t.

HMS 80:20 (Scrap) to Billet (Semi Finish) Spread-INR 7,300/t.

Price highlights

End-cutting-billets spread: In Mandi, the end-cutting scrap and billets spread stood at INR 5,000-5,500/t.

Domestic/imported scrap price gap: Imported melting scrap prices at Nhava Sheva Port were at around $380-$390/t, which equates to approximately INR 34,107/t (including freight). Local scrap (HMS 80:20) prices in Mumbai stood at INR 33,800/t, down INR 400/t 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 14,250/t.

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

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