India's stainless steel scrap imports range-bound m-o-m in May'24 amid logistic issues

In May 2024, India's stainless steel (SS) scrap imports remained stagnant with a marginal increase of 1% m-o-m, largely due to the challenges posed by increased freight rates, ongoing port congestion, and limited container availability in Southeast Asia. This region accounts for approximately 45% of India's SS scrap sources.

According to data from BigMint, India's total stainless steel scrap imports stood at 83,143 tonnes (t) in May 2024, slightly up from 82,371 t in the previous month. However, compared to the previous year, SS scrap imports experienced a notable decline of 17% in May 2024, dropping from 99,963 t in May 2023.

Grade-wise imports

In the scrap import segment in May, shipments of zurik grade rose by 8% m-o-m to 19,764 t, while non-zurik cargoes witnessed a 1% drop, settling at 63,380 t. There was a notable 24% increase in imports of 400 series to 15,600 t from 12,606 t in April. Similarly, imports of the 300 series witnessed a 1.3% gain, settling at 53,615 t compared to the previous month's 52,931 t. Meanwhile, imports of the 200 series scrap witnessed a drop of 5% m-o-m in May, settling at 8,651 t from the previous month's 9,079 t.

Why did scrap imports remain below expectations?

Increase in SS production in May: India saw a 7% m-o-m increase in the overall domestic production of stainless steel in May, at 289,000 t compared to 270,000 t in April. Finished flats production constituted 206,000 t, while finished longs made up the remaining 83,000 t. Concurrently, on a y-o-y basis, production witnessed an increase of 10% from 263,000 t in May 2023. Additionally, imports of semi-finished slabs remained consistent m-o-m in May 2024 at 50,618 t.

Preference for domestic scrap over imports: Steel mills are focusing on domestic scrap due to the increased costs linked to importing scrap from Southeast Asia. Issues such as port congestion and escalating freight charges are compounding the challenge. Southeast Asia, which supplies approximately 45% of India's stainless steel scrap, is particularly affected. Current freight rates from Southeast Asia to India's west coast are at $200/t or $4,000 per 20-feet container.

Fluctuating nickel prices: In May, the average LME nickel prices surged to $19,805/t, marking an 8-month high and a 7.5% m-o-m rise from the preceding month's average of $18,452/t.

Rising nickel prices stemmed from constrained Indonesian ore supply, ongoing US and UK sanctions on Russian exports, and bans on sales at LME and CME. International Nickel Study Group's (INSG's) lowered production forecast aligned with robust demand for nickel, vital in production of stainless steel and EV batteries, amid speculation of Chinese stockpiling to address potential shortages.

Concerns over supply disruptions due to unrest in New Caledonia have impacted prices. Violent protests over voting rule changes have led to a state of emergency and crippled production from French miner Eramet SA. The economic crisis, worsened by high energy costs and export restrictions, have caused nickel production to plummet and driven major investors away.

These factors put an upward pressure on imported scrap prices in May.

Country-wise shipments

According to country-wise shipment data, the US retained its position as the leading exporter of stainless steel scrap to India, although shipments decreased by 6% to 14,557 t in May. South Korea and Vietnam followed, with shipments of 8,594 t (up 44%) and 8,316 t (up 26%), respectively. Meanwhile, other countries witnessed a drop of 9% m-o-m, settling at 29,430 t from the previous month's 32,400 t.

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