India: Imported scrap prices drop, currency depreciation impacts trade activities

India’s imported scrap prices fell further this week with very few bookings recorded. The steep currency depreciation and sharp volatility in global scrap prices kept trade activities limited. Indian Rupee (INR) depreciated to 77.5 versus dollar ($) against 76.9 levels seen a week ago.

Meanwhile, domestic prices too, fell to around one-month low on negative sentiments. Participants believe that global suppliers could’t hold much now and are ready to sell their material at low prices. A few buyers were holding back in anticipation of a further price correction, SteelMint learnt.

Recent deals and offers    

• Price indications for UK-origin shredded in containers are assessed at around $540-545/t CFR levels, down by around $50/t w-o-w. Deals remained absent.
• UAE-origin HMS 1 is being quoted at $535-540/t CFR levels. A small quantity deal was concluded at $535/t CFR levels.
• A deal for 2,400 t of Dubai-origin HMS-1 was concluded at $555/t CFR Nhava Sheva, earlier in the week.

“Prices are likely to come down further as the monsoon approaches, due to limited construction activities. Furthermore, power cuts at mills may cut production”, said a prominent scrap trader.

Factors resulting in fall in prices 

• Turkey’s scrap import prices drop to over 3-month low: Turkey’s imported scrap prices continued to move down, hitting a 3-month low after Baltic and US-origin cargoes were booked recently. An Aegean region-based steel mill bought 20,000 t of UK-origin HMS 1&2 (80:20) bulk cargo at $480/t CFR. Another Aegean-based company bought a US-origin mixed cargo, comprising 15,000 t of HMS 1&2 (80:20) at $495/t CFR and 15,000 t of shredded and bonus material at $510/t CFR.
• Steep price drop in neighbouring markets: As Pakistan and Bangladesh markets resumed after Eid holidays, steel mills and buyers turned active to secure scrap  before the onset of monsoon. Shredded scrap prices in Pakistan came down by $45-50/t w-o-w in recent deals concluded while Bangladesh mills actively secured three bulk cargoes from USA at low levels.
• Domestic scrap prices in India drop: Domestic scrap prices witnessed minor changes across markets, as per SteelMint assessment. In Maharashtra, prices lacked support due to low buying interest while in north India, prices remained almost stable d-o-d.

SteelMint’s assessment for HMS (80:20) stood at INR 43,300/t DAP ($558/t) Mumbai, down INR 700/t ($9/t) w-o-w.

• Rebar sales still weak: Buying enquiries for induction furnace-route rebar has improved slightly. The increase in raw material (billets and sponge iron) prices  supported the rebar market, accelerating the transactional activities, though the pace is yet to pick up. However, manufacturers are also offerring tradable discounts as per quantities and raw material price movement.

Domestic IF rebar (Fe 500) prices stand at INR 60,600/t ($781/t), registering a sharp fall by INR 2,700/t ($34/t) from INR 63,300/t ($823/t) exw-Mumbai.

Outlook: As the gap between imported and domestic scrap prices narrowed and the rupee depreciated, mills are likely to prefer domestic material at low levels.