Opportunity for Indian Scrap Importers to take Position

Recent Supreme Court verdict on temporary shutting of half of the Iron ore producing mines in Odisha is expected to trigger shortage of Sponge in the market thereby leading to sharp rise in imports of Scrap in upcoming days.

As per industry experts, it is the best time for Steel Mills and importers to take an advance position in imported Scrap market.

Recent Imported Scrap Offers

As per an importer based in Mumbai, currently HMS 1 & 2 offers from Middle East is at around USD 393-395/MT CFR Nhava Sheva for 23 MT container, whereas offers from Europe is hovering in the range of around USD 385-390/MT  CFR Nhava Sheva. Turning & Boring offers from Europe remained at USD 355/MT CFR Nhava Sheva.

HMS offers from South Africa is in the range of USD 390-395/MT CFR Nhava Sheva for 22-23 MT container ,whereas premium grade HMS offers  from South Africa ranged between USD 400-405/MT for 24 MT container loadings.

Similarly, buying interest in Chennai remain dull as Scrap from Middle East countries were offered at higher price. HMS offers from Middle East is at USD 400-405/MT CFR Chennai, whereas from Europe it is at around USD 395/MT. Turning & Boring offers from Europe remained at USD 365/MT CFR Chennai.

Improving Prospects ahead

Industry veterans view that steel prices in India are likely to rise owing to Iron ore shortage and falling Sponge iron production. Sponge iron prices have started rising and this may lead to increase in Scrap prices.

One of the Steel Re-rollers based in Mumbai said,

[su_quote]With Scrap offers stable at USD 390-395/MT supported by strong INR, it makes sense for us to go for imports.[/su_quote]

The appreciating INR will invoke much interest from traders as the exchange rate has touched the levels of 58.35 against USD.

It is to be noted that East India is considered as Sponge dominated market. But, after this interim mining ban, some Steel Mills have started stocking Scrap in anticipation of raw material shortage.

India produced around 80 MnT of crude steel in FY14. It consumed around 17-18 MnT of Scrap, out of which around 4.5 MnT was imported during this period. A comparison of exchange rate and imported Scrap offers to India is as shown under: