India: SteelMint's scrap index falls INR 100/t d-o-d

SteelMint's domestic steel scrap (end-cutting) index fell by INR 100/t d-o-d to INR 40,800/t DAP Mandi Gobindgarh on 13 July, 2023. Shortage of ferrous scrap in the market weighed on steel prices and low steel demand in the Mandi market was evidenced by the fact that mills engaged in need-based purchases.

Market scenario

"Due to the flood-like situation in north Indian states in north India and congestion on highways, it is very difficult to deliver goods. Traffic jam is rampant on highways and transporters are not being allowed to continue working in risky conditions. Ambala, Yamunanagar, and the rest of Club Highway will stop temporarily. Local trade is continuing in Mandi and Ludhiana and some routes have been diverted for dispatch of material," a source informed SteelMint.

Semi-finished steel market

Steel ingot prices in Mandi edged down by INR 200/t to INR 45,800/t at the time of reporting and price normalisation. Meanwhile, prices in other key markets decreased in the range of INR 200-400/t. The market witnessed limited trading as major mills cut production by 30%-40%, while selling pressure continues in the market. Sources believe that ingot prices are likely to fall further by INR 100-200/t before bottoming out.

Imported scrap market

Imported scrap buyers are active in booking material for August shipments. Some steel producers are booking material which is not of UK/EU origin. In conversation with SteelMint, a scrap trader source divulged: "UK/EU-based sellers and yard owners are not decreasing their offers, and buyers are not increasing bids."

Further, suppliers are not aggressive in selling at low prices and are holding material. In the context of Indian buyers, steel mills have good sponge iron availability at reasonable prices, the source added. The market witnesses a seasonal downtrend in the July-August period.

Overview of other markets

Ship-breaking melting scrap prices in Alang, Gujarat, increased by INR 300/t d-o-d today. As per SteelMint's assessment, HMS (80:20) prices opened at INR 36,300/t exy. Semi-finished steel prices increased in yesterday's trading session and active buying interest for scrap prompted suppliers to hike offers, sources informed.

The Durgapur market observed a downward trend in prices amid low trade volumes. Producers are expecting prices of semis to remain under pressure on account of a slight rise in inventories of both semis and finished long steel. Billet prices in Durgapur stood at INR 41,750/t, down INR 200/t d-o-d, while rebar prices were assessed at INR 44,200/t, down INR 200/t today.

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 $385-$390/t, which equates to approximately INR 34,225/t (including freight). Local scrap (HMS 80:20) prices in Mumbai stood at INR 34,000/t exw.

Raipur sponge iron-billet spread: The current conversion spread (margin) from pellet-based DRI (P-DRI) to steel billets in Raipur stands at INR 14,800/t.

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