India: Ferrous scrap prices in Chennai drop by INR 200/t w-o-w – 6 Mar

• Semi-finished steel prices rise by INR 1,000/t w-o-w
• Mills increase sponge usage in charge mix to cut costs

Chennai’s HMS (80:20) scrap prices decreased by INR 200/t w-o-w, settling at INR 30,200/t, though they remained stable d-o-d. In contrast, billet prices rose by INR 1,000/t w-o-w to INR 43,500/t, while maintaining stability on a d-o-d basis. Rebar prices also saw an increase of INR 800/t w-o-w to INR 47,000/t, with a d-o-d rise of INR 200/t seen. The recent improvement in trade activity for semi-finished and finished steel indicated a positive shift in the market.

Imported and domestic price trends

As per a scrap trader, shredded scrap from Australia was offered at $370-375/t CFR Chennai, while HMS 80:20 was priced at $355-360/t. Despite these offers, demand for imported scrap remains weak. To reduce costs, major mills have started incorporating 50-60% of pellet sponge into their charge mix, benefiting from its more competitive pricing.

Domestic prices of HMS (80:20) scrap are currently at INR 30,000-30,500/t for buyers settling deals with immediate payment. For transactions involving extended credit terms, prices increased to INR 30,500-31,000/t. Most offers are concentrated within the INR 30,000-31,000/t range, with the majority of deals being concluded at these levels, signalling stability in the market.

Buyer-supplier sentiments

A mill official noted that the market has experienced an improvement in finished steel trade, with billet and rebar prices continuing to rise due to strong demand from the project sector. Despite this, scrap offers remain stable, as the supply of domestic scrap to the mills is currently robust and sufficient at the prevailing offers.

According to other market sources, although trade and prices of billets and rebar have increased, there is uncertainty regarding whether these levels will be sustained. Scrap offers, however, have remained stable from the buyer’s side, as the supply of material to the mills continues to be ample. Additionally, Ramadan is impacting the scrap market, with some suppliers choosing to sell their scrap to maintain cash flow rather than holding it.

A scrap supplier said that the current price range for HMS 80:20 is INR 30,000-31,000/t, based on payment terms. Scrap prices have remained stable, even though those for billet and rebar have increased. Mills are uncertain if the higher prices of billets and rebar will hold, and due to losses in the previous months, they are reluctant to raise scrap purchase prices.

Regional comparison

In the western India-based Jalna market, billet and rebar prices remained stable, assessed at INR 42,300/t and INR 48,600/t, respectively. Meanwhile, HMS 80:20 prices saw a d-o-d increase of INR 200/t, settling at INR 32,200/t. Additionally, there has been a noticeable increase in trade activity in recent days, particularly in the semi-finished and finished steel sectors, pointing to improving market dynamics.

Outlook

Due to ongoing uncertainty about the sustainability of trade activities in finished steel, market participants anticipate that scrap prices will remain stable or could experience some improvements in the near term.