Indian Scrap Importers Restrict Purchases on High Prices

Rising scrap prices in global market has made Indian importers to stay away from the seaborne trade. Containerized shredded scrap (ISRI 211) from US/Europe are assessed at around USD 270-275/MT, CFR Nhava Sheva. However, buying interest is seen at USD 245/MT, CFR levels. HMS 80:20 from Middle East is available at USD 235-240/MT, CFR India.

Global scrap prices have gone up in-line with rising Chinese billet export offers, which were the major reason for fall in steel prices globally in 2015. Chinese billet export offers have moved up by USD 50-60/MT in last one month. Whereas, scrap prices have gone up by USD 30-40/MT during the same period.

Turkey’s buying pushing up scrap prices

Active buying from Turkey has resulted in sharp increase in global scrap prices. Turkey is the largest importer of scrap in the world, with an annual import of 19 MnT. The nation has reduced scrap purchases in 2015 owing to cheaper import of billet from China.

Current offers for HMS 80:20 from US to Turkey are assessed at USD 268/MT and from Europe at USD 259-260/MT, CFR Turkey basis.

Why Indian buyers are not importing at higher prices?

Indian importers are not accepting higher offers for two reasons:

1. Availability of sponge iron and scrap in domestic market
2. Increase in bulk import

Sponge iron prices in domestic market have not increased in-line with global scrap prices. Buyers prefer to stick to sponge iron rather than importing expensive scrap. Approximately 25% of India’s total crude steel comes from sponge iron and around 17% from melting scrap.

Another reason is increase in bulk import of scrap, which has increased the availability of ready stock at port. It is to be noted that Indian importers have imported 15 vessels in 2016 (till April).

Global Ferrous Scrap Offers as on 14 Apr’16

Source: SteelMint Research