India's stainless steel scrap prices firm w-o-w despite minor drop in LME nickel

Prices of stainless steel scrap in both the domestic and imported segments in India were firm compared to the previous assessment on 17 May, 2024. Despite a small decrease in LME nickel prices, scrap stayed strong due to heightened market uncertainties regarding the supply of raw materials and the recent price hikes by primary producers in finished coils.

Nickel prices for 3-month delivery on LME saw a minor drop of 3% w-o-w, settling at $20,250/t levels, at the time of reporting. Notably, nickel stocks in LME warehouses stood at 84,042 t.

Meanwhile, domestic scrap prices stood firm with BigMint's assessment for SS 304 scrap at INR 123,000/t and that of SS 316- grade at INR 215,000/t, ex-Delhi, both marking an increase of INR 2,000/t w-o-w.

A source said, " The market continues to witness a lack of buying interest. In particular mill-based buyers are focusing solely on domestic materials due to the current impracticality of importing. Meanwhile, tight cash flow is also contributing to the subdued buying activity."

BigMint's assessment for imported SS 304 scrap originating from the nearshore region rose by $40/t to $1,490/t, CFR Mundra. Meanwhile, suppliers were heard offering scrap above $1,500/t levels and the bids were $50-$60/t lower.

316-grade scrap was priced at $2,650/t, moving up by 1.5% w-o-w, CFR Mundra. Offers of 316-grade were heard as high as $2,680-$2,700/t. Meanwhile, buyers' bids were heard in the range of $2,580-$2,610/t levels.

A trade source informed BigMint, "As of now, the bid-offer disparity looks quite significant and buyers are not willing to buy the material at these prices. Additionally, there is a slight shortage of 316-grade scrap in the market, which is further driving prices along-side the fluctuating LME nickel prices."

Additionally, offers for 430-grade scrap sourced from nearby locations are priced at $660-$680/t and that of 201-grade scrap was heard at $800-$820/t, CFR Mundra.

A scrap supplier said, "Scrap suppliers are hesitant to sell to India because buyers from the EU region are offering prices higher by $100-120/t. The elevated prices could be attributed to the ongoing strikes in EU-based stainless steel mills, which are impacting production. It appears that these buyers are actively involved in importing both scrap and finished materials."

Supply-demand dynamics of nickel market

Indonesia's Ministry of Energy and Mineral Resources has approved 204 nickel mining exploration and production plans, totalling 220.7 million tonnes (mnt) in quota. However, concerns loom over the adequacy of production quotas to meet this year's anticipated demand, with over 90% of plans expected to be greenlit. Predicted demand for nickel ore in 2024 exceeds last year's production, potentially leading to shortages.

Approval concentration in the Morowali region has led to concerns about regional nickel ore shortages, as areas like Sulawesi and Weda Bay have notably lower approval rates. This disparity in approvals may exacerbate supply imbalances and affect global nickel markets.

Nickel consumption is rising, driven by foreign investments in Indonesia. India's leading stainless steel producer plans a 1.2 mntpa stainless steel melt shop, while Green Eco-Manufacture is constructing a 30,000 tonnes per annum (tpa) battery cathode precursor plant. Yet, intermediate nickel supplies face constraints due to reduced availability, impacting the battery precursor market negatively.

Outlook

Amid ongoing raw material concerns from swing suppliers like Indonesia and New Caledonia, coupled with the growth of Chinese stainless steel and electric vehicle demand influencing nickel prices, the prices of stainless steel scrap are anticipated to either rise further or remain at current levels.