India: SteelMint's scrap index supported by supply crunch; steel demand remains bearish

SteelMint's domestic steel scrap (end-cutting) index remained stable at INR 40,300/tonne (t) DAP Mandi Gobindgarh on 17 July, 2023 against the previous trading session. A shortage of scrap persists in the market which is why major mills are procuring in small quantities. In addition, bearish demand for semi-finished and finished steel is weighing on sentiments.

Steel ingot prices in Mandi inched up by INR 100/t to INR 45,300/t at the time of reporting and price normalisation. Meanwhile, prices in the other key markets up by INR 100-200/t. According to sources, mills are cutting down production considering low demand.

Imported scrap market overview

Indian scrap buyers remain active in the imported market, as many deals were concluded last week. However, at the beginning of the week, market players were less aggressive in booking any fresh material and instead opted to watch the market activities closely.

Imported scrap prices hover at $405-$410/t CFR Nhava Sheva and buyers are waiting for further price corrections. Notably, the domestic market which was affected by floods last week, is now gradually normalising. Hence, the industry experts believe that trade activities will likely improve this week.

Overview of other markets

Alang: Ship-breaking melting scrap prices in Alang, Gujarat, remained steady for the third consecutive day on 17 Jul'23. As per SteelMint's assessment, HMS (80:20) prices stood at INR 36,000/t exy. Firm semi-finished steel prices in the last trading session and moderate buying inquiries for scrap in the region prompted suppliers to keep offers stable.

Hyderabad: The semi-finished steel market witnessed moderate demand with rolling mills purchasing on a need basis. Demand for rebars has been hit as construction work has come to a standstill. However, sponge prices are soaring due to a shortage of raw materials. Billet prices in Hyderabad were assessed at INR 42,000/t exw while rebar prices stood at INR 46,500/t exw.

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 34,195/t (including freight). Local scrap (HMS 80:20) prices in Mumbai stood at INR 34,300/t increased by INR 300/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 14,700/t.

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