Imported Scrap Offers to India Move up on Rising Domestic Prices

Steel mills are running short of stock, but fall in INR against USD is resisting rise in scrap offers.

Imported scrap in India remain positively stable in the beginning of the week with HMS 1&2 at USD 230/MT & shredded at USD 250/MT, CFR India, holding mixed sentiments.

With sharp rise in domestic steel (billet) prices, post depreciation in Indian currency, mills are keen to capitalize on it. Hence, the demand for scrap has improved, specially from Middle East due to lower delivery time.

Scrap offers from Europe/US are strong at USD 230/MT for HMS 80:20 and USD 250/MT, CFR for Shredded. Offers from Middle East are at USD 230-235/MT for HMS 1&2 (23 tonnes loading) and USD 240-245/MT for HMS 1 (25 tonnes loading).

South African HMS 1 (25 tonnes) are offered at USD 235-240/MT while P&S from Singapore at USD 255/MT, CFR India.

Fall in INR is (making imports expensive and) resisting scrap importers from buying scrap whereas, limited availability of scrap with steel mills is supporting imported scrap offers.

An importer at West Coast of India shared, “We are getting a bulk shipment offer for US origin mixed scrap, containing shredded, HMS 80:20 and P&S at USD 245/MT, CFR India, but we haven’t sealed the deal yet.”

Though the buyers looked a little shy about placing new orders, market participants report steel furnaces to have limited stock of raw material with them as they could not make many bookings in last 2 months owing to high volatility in global market.

Hence, they are in search of decent deals for scrap and fulfilling the rest of their requirement with domestic scrap & sponge.

Offers in domestic market inch up on limited scrap supply

Domestic offers for melting scrap & sponge have witnessed a rise of INR 500-1,000/MT (USD 7.7-15/MT) in a week’s time, owing to limited availability of imported scrap in Indian market along with continuing currency depreciation (INR/USD) .

In an effort to overcome the situation, their is a shift in interest of Indian manufacturers. Mills have switched to domestic scrap & sponge iron to reach their ideal raw material mix.

What would happen if INR gets stability at 63-64 against USD?

A scrap participant shared his opinion, “Looking at the current demand position, if INR wasn’t the constrain, scrap offers might have shot up by another USD 10-15/MT. Today scrap, which is offered at USD 245-250/MT, would not have been offered below USD 260-265/MT, CFR India.”

Global Scrap Offer as on 24 Aug’15