SteelMint's benchmark domestic scrap index remains consistent for last three days

SteelMint's domestic scrap index remained more or less stable d-o-d, as the market saw price fluctuations of up to INR +/-300/t only.

The domestic steel scrap (end-cutting) index decreased by INR 200/tonne (t) to INR 43,600/t DAP Mandi Gobindgarh on 20 January, 2023.

• Scrap offers remained stable throughout the day.
  
  
• Semi's buyers are looking for prices below INR 500/t FoR Punjab region.
  
  
• Negative price sentiment persisted.
  
  
• The local scrap market is under tremendous pressure due to anticipated imported materials.
  
  

A lack of demand among market participants led to limited spot trades, as buyers are only purchasing material for their immediate requirements. Additionally, some traders stated that due to transportation issues, material had not been delivered on time, which meant that mills were not able to reduce their purchasing prices for scrap.

"Weather is one of the major issues for the mandi market, causing a slowdown in demand for semi-finished and finished steel products," a mill owner said.

Market observers attributed the lack of trade to sluggish demand for rebars and billets in domestic markets. Those neighbouring states' re-rollers, who mainly depend on Mandi-based mills' billets, have currently gone for scheduled maintenance. It surfaced that semi-finished mills had an impact on the ingots prices, reducing it from INR 300-500/t to INR 49,300/t d-o-d.

A lack of confidence among market players is a result of negative sentiment around prices; volatility in melting and steel prices are major causes of mistrust. Due to frequent fluctuations in prices, it has been difficult for buyers and sellers to predict future movements. This uncertainty has caused market participants to take a cautious approach, resulting in limited spot trades.

According to SteelMint's research, it is expected that there will be more imported scrap in Indian ports in January 2023 than in December, 2022. Approximately 5.8 lakh metric tonnes of imported scrap are expected, based on analysis and market participants.

Snapshots of key markets

Punjab : Due to a low demand in Punjab, there has been an accumulation of semi-finished and finished inventory, resulting in minimal purchasing.

Jalna : The scrap and steel market has remained relatively stable with hardly any major revisions. According to mill owners, this stability is expected to continue in the upcoming weeks as well and no major changes are anticipated.

Gujarat : Alang market's shipbreaking melting scrap prices remained stable d-o-d on 20 January 2022, according to SteelMint's assessment. HMS (80:20) prices are assessed at INR 38,700 per tonne ex-yard. Steady semi-finished steel prices in Gujarat during the last trading session, and moderate buying inquiries for scrap in the region prompted suppliers to keep their offers stable today.

Chennai : Semi-finished steel prices remained constant due to less movement in finished product especially rebars. Rerollers may cut their offers due to an inadequate spread from billets to rebars. Although, market participants are expecting that due to the festive holidays, trade activities may resume from Monday onwards.

Price highlights-

End-cutting and billets spread: In Mandi, the end-cutting scrap and billets spread was at around INR 5,000-5,500/t.

Domestic and imported scrap price gap: Imported melting scrap prices at Nhava Sheva Port were at around $435-440/t (including freight, which equates to approximately INR 38,100/t), while local scrap - HMS (80:20) - prices in Mumbai were assessed at INR 37,200/t.

Raipur sponge iron-billet spread: The current conversion spread (margin) from pellet-based DRI (P-DRI) to steel billets in Raipur stands at around INR 15,350/t.

To see SteelMint's melting scrap assessment, pricing methodology and specification documents, Click here

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