India: Imported scrap trade slow on bearish domestic sentiments
India's imported scrap trade remained silent for yet another week with no aggressive bookings being observed. Imported scrap offers saw a slight correction as compa...
India's imported scrap trade remained silent for yet another week with no aggressive bookings being observed.
Imported scrap offers saw a slight correction as compared to last week. Market players continued to await further price corrections due to sluggish domestic market sentiments.
- Fresh offers for shredded scrap are being quoted at $550-555/t CFR Nhava Sheva, down $5-10/t w-o-w.
- Around 1,000 t of UAE-origin containerised HMS 1 scrap was booked by a Gujarat-based mill at $475/t CFR earlier this week. However, majority of offers are at $480-485/t CFR levels.
Reasons for quiet market
- Bids-offers discrepancy: Imported scrap trade slowed down due to discrepancies in bids and offers. The low-cost scrap available domestically has kept imported scrap bids at lower levels. Melting scrap prices in the domestic market fell sharply across markets due to a correction in sponge iron prices amidst low demand for finished steel products. This, in turn, weighed on semi-finished steel prices. Prices in the near term may witness minor corrections, trade sources informed. SteelMint's assessment for HMS (80:20) was recorded at INR 35,900/t ($479/t) DAP Mumbai, a decline of INR 1,100/t ($15/t), while prices for Jalna were at INR 35,100/t DAP ($469/t), down by INR 1,000/t ($13/t)w-o-w.
- Buyers await further drop in imported offers: The global downtrend in prices has slowed down activity, with market participants apprehending further correction in prices. Turkey's West Marmara region-based steel mill booked a Europe-origin deep-sea cargo containing 30,000 t of HMS 1&2 (80:20), 5,000 t of plates and structural (PNS) material, and 5,000 t of shredded scrap at an average price of $492/t CFR.
- Suppliers getting better prices in neighbouring markets: SteelMint's assessment for shredded scrap imports into Pakistan stands at $555/t CFR, largely stable d-o-d. Around 500 t of UK/EU-origin shredded scrap in containers was booked at $561/t CFR Qasim, while 2,000 t of US-origin shredded was traded at $548-550/t CFR. Thus, better price acceptability in neighbouring markets has kept the India market quiet.
- Sponge iron prices sink to six-month low in Raipur: Pellet-based sponge iron, P-DRI (FeM 80%), prices fell to INR 28,500/t exw-Raipur. Such low levels - of INR 28,450/t - were last seen towards end-May. Hence, scrap buyers are likely to increase their interest in the increased sponge iron inventory, which is available at low prices. India's sponge iron production increased by 35% in the Apr-Oct'21 period compared to the corresponding period of FY'21. In comparison, production remained low key in 2020 due to the devastating effect of Covid-19 in H1FY'21. Sponge production in Q1FY'22 was, in fact, over 100% higher compared to the same period last fiscal.
- Demand remains subdued for IF rebar: Induction furnace rebar prices remained under pressure today due to weak buying inquiries, especially from the retail segment along with diminishing semi-finished steel movement. While manufacturers at a few locations chose to keep offers stable in the hope of improving transactions, they were ultimately forced to offer trade discounts. IF-grade rebar prices remained under pressure, dropping INR 1,100/t ($15/t) to INR 48,800/t ($651/t) exw-Mumbai.
Sentiments are negative in the domestic market. However, due to resumption in construction activities, imported scrap trade may resume in the coming weeks.