India: SteelMint's scrap index stable despite subdued steel market sentiment
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SteelMint's domestic steel scrap (end-cutting) index remained stable d-o-d at INR 38,100/t DAP Mandi Gobindgarh on 21 October, 2023. In the region, scrap market dynamics are currently subdued. Mill owners are procuring scrap in average quantities even as they grapple with the pressure to sell. Lukewarm demand for finished steel is slowing down the pace of trading. Meanwhile, the extension of credit days by mills has complicated the scenario for scrap traders, intensifying their liquidity concerns.
Semi-finished steel market
Today, steel ingot prices in Mandi remained stable at INR 43,900/t at the time of reporting and price normalization. Meanwhile, prices in other key markets rose by INR 100-200/t. In the market, there has been a noticeable slowdown in the trade of semi-finished and finished steel.
Steel market: Weekly trends
The Mandi Gobindgarh market has seen a decline in prices of both semi-finished and finished steel in recent weeks, largely attributed to low demand. Continuous liquidity issues are further hampering trade flow in the region. Despite mills pushing sales and making attractive offers, the trading sentiment is subdued.
Weekly price movements
Ingot prices in Mandi Gobindgarh fell by INR 1,350/t. End-cutting scrap prices dropped to INR 1,100/t. Sponge iron (CDRI) prices decreased by INR 1,200/t, while rebar (fe500) prices moved down by INR 1,300/t w-o-w.
Weekly imported scrap market
The imported ferrous scrap market in India was observed to be slow this week, with only a few deals reported. Disparities between bid and offer prices, a lack of buying interest, and a slow domestic steel market contributed to the sluggishness in the market.
Shredded scrap offers from Europe dropped by $14/t w-o-w to $400/t CFR Nhava Sheva in comparison with $414/t CFR a week ago. HMS (80:20) scrap offers from Europe stood at $382/t, down by $18/t as against $400/t in the preceding week. It is noteworthy that as the week drew to a close, buyers were targeting shredded scrap at a price of $395/t CFR and HMS at $375/t CFR.
Steel mills, particularly in eastern India, had decreased their production rates by 40-50% because of a significant inventory surplus. Consequently, they were cautious about acquiring new raw materials.
Overview of other markets
On 21 October, Gujarat's Alang market witnessed a minor decrease of INR 100/t d-o-d in ship-breaking melting scrap prices. According to SteelMint, HMS (80:20) were at INR 36,500/t ex-yard, influenced by subdued demand and a decline in semi-finished steel prices from the prior trading day in the region.
Mumbai's IF route Rebar (Fe 500) prices declined by INR 400/t to INR 49,900/t exw d-o-d. Subdued demand has been spotted for current offers in the market. Scrap (HMS 80:20) prices stand at INR 34,700/t DAP. Conversion spread from scrap to billet hovers at INR 9,000-9,500/t.
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 $380-$382/t, which equates to approximately INR 33,950/t (including freight). Meanwhile, in Mumbai, local scrap prices stood at INR 34,700/t, falling by INR 100/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 13,900/t.
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