India: SteelMint's scrap index up marginally by INR 100/t on supply concerns

SteelMint's domestic steel scrap (end-cutting) index inched up by INR 100/t d-o-d to INR 40,900/t DAP Mandi Gobindgarh on 12 July, 2023. Though the market was dull with no major trade movement seen, the shortage of scrap persisted in the market, supporting the index.

"Pathways have been cleared. Several scrap trucks started movement in Mandi Gobindgarh yesterday from late night until early morning," a mill owner informed SteelMint. "Earlier booked material are now being delivered to mills."

In Mandi, steel ingot prices opened on a positive note, rising by 200/t d-o-d to INR 46,200/t in the first half of the trading session. However, in the second half, prices dropped by 200/t to INR 46,000/t due to selling pressure.

Mills have lowered the usage of sponge iron in steelmaking due to rains. The persistent scrap shortage is also adding to their concerns. Several small furnaces remained closed due to the limited availability of raw material while some are operating for less than 10-12 hours in a day.

Trade activity in the finished steel segment remained dull as TMT (rebar) manufacturers reduced production due to modest demand.

Imported scrap market

Indian steel producers continued to book imported scrap at favourable prices. Considering lack of active participation by Pakistani and Bangladeshi buyers, Indian mills were seen taking an advantage to replenish inventory for post monsoon production. Deals are happening at $405-$410/t levels for shredded material.

Overview of other markets

Alang: Ship-breaking melting scrap prices in Alang, Gujarat, remained stable d-o-d on 12 Jul'23. As per SteelMint's assessment, HMS (80:20) prices stood at INR 36,000/t exy. Steady semi-finished steel prices in the region and moderate buying inquiries for scrap prompted suppliers to keep offers stable.

Mumbai: Limited sales in the rebar spot market were seen owing to fluctuations in billet prices in the northern region. Mumbai HMS (80:20) prices are hovering at INR 34,000/t DAP. The conversion spread from scrap to billet stands at INR 8,900/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 $385-$391/t, which equates to approximately INR 34,331/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 15,000/t.

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