Indian domestic melting scrap prices have been falling gradually from last couple of weeks. Amid dull finished steel market, re-rollers and furnace owners tried to bid low so as to maintain their conversion spread to source raw material i.e. scrap, specifically in southern & western India.
Downside is being noticed in particular regions of India. Melting scrap prices in western India (Maharashtra/Gujarat) contracted by INR 700-1,500/MT whereas in southern region (Chennai) market remained almost stable with minor change of INR 100-300/MT on weekly comparison.
Trade associates are expecting scrap prices to remain disturbed in near term but that too for particular market regions.
Some of the traders and re-rollers based in Maharashtra (Jalna) anticipate domestic melting scrap price range to come down to INR 21,600-21,800/MT which is currently hovering at INR 22,000-22,100/MT amid limited finished steel demand and in order to maintain proper conversion spread.
In addition to prices in Gujarat market are expected to reach around INR 22,300-22,400/MT from current range of INR 22,600/MT, Ex-Alang.
However, trade associates based in south region are expecting melting scrap prices to move up gradually due to limited availability in the domestic market and lack of containers, as imported scrap will take more time to reach.
Further, imported scrap is getting costlier due to depreciating currency as price valuation drifted down by around 4% on a monthly basis and is currently evaluated at INR 74.21 against USD.
As per our analysis, southern India melting scrap prices are likely to remain range bound with no major changes in near term as other semi finished steel from other regions are easily available at reasonable prices. However west region, the same may be adjusted as per finish steel price movement where minor selling pressure still exists.
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