Indian Scrap Prices plunge to 4-Year Low

Indian domestic Scrap prices fell to 4-year low level due to falling Billet & Scrap prices in the global market.

Challenging global environment for steelmakers coupled with significant overcapacity of Steel in China has somehow affected the Indian market. Scrap prices in domestic market have plummeted to a 4-year low level in May’15. Oversupply of Billet by primary players is the prime factor for decline in Scrap prices. Indian Billet prices also fell to 4-year low.

Currently, HMS Scrap is being offered at INR 20,450/MT in Mumbai and INR 19,450/MT in Chennai. While in Alang (Gujarat), Ship breaking prices are assessed at INR 21,450/MT. (Prices excluding 12.5% excise and local VAT)

On the other hand, imported Scrap offers are hovering in the range of USD 280-285/MT for HMS 1&2 and USD 300-306/MT for Shredded Scrap on CNF Mumbai, India. While, Ship breaking offers are assessed at USD 375-400/MT CNF India, Alang.

Meanwhile, Sponge iron prices are also declining due to cheaper imports of Iorn ore and improving supply in domestic market. Moreover, Sponge iron production has also started to increase in the major markets owing to easy availability of key raw material, Iron ore.

Scrap contributes about 20% of India’s Crude Steelmaking

Scrap plays a vital role in India’s crude steelmaking. About 20% of steel is made out of recyclable Scrap. In FY14, India’s melting Scrap consumption was assessed at about 17-18 MnT, out of which, 4.5 MnT was through import and rest was via domestic availability.

In FY15, considering India’s crude steel production at about 84-85 MnT, Scrap contribution has fallen by about 19% as incremental production has come through BF route, for which Scrap consumption is very low.

Scrap Imports to India up by 27% in FY15

Indian Ferrous Scrap import witnessed a rise of about 27% in FY15. Total imports was recorded at 5.2 MnT in FY15 against 4.1 MnT in FY14.

Whereas in FY14, Scrap import had drastically dropped to 4.1MnT from 6.9 MnT in FY13. This was due to rise in import duty and high availability of Sponge iron in the market.