Falling Scrap prices in the global market poses a major threat to domestic market as it is trading higher by INR 1,000-1,500/MT.
Market participants mentioned that as landed cost of imported Scrap is cheaper than domestic prices, they will not be surprised if local prices correct from these levels.
“Current cost of importing Scrap from Middle East/ Europe is around INR 21,700/MT (including customs duty and other port charges). Whereas, domestic Scrap is being offered at INR 23,000/MT (ex-Mumbai). If global Scrap prices remain at these levels for few more days, we will not be surprised if local Scrap prices fall by INR 1,000/MT,” said a induction furnace owner based in West region of India.
| Particular | Prices in USD/MT | Prices in INR/MT | |
| A | HMS Scrap on CIF India Basis | 320 | |
| B | Import Duty @ 2.5% of A | 8 | |
| C | Ground loss @ 1% of (A+B) | 3 | |
| D | Port Handling + Custom Clearance | 20 | |
| Total | 351 | ||
| Landed cost of imported Scrap | 21,700 | ||
| Domestic Scrap | 23,000 |
1 USD = INR 61.5
As per CNF Mumbai; Origin: Europe
Excise/CVD Extra
Figures rounded off
Global prices have corrected by about USD 60/MT (i.e INR 3,650/MT) in last 6 months. Whereas, domestic Scrap prices have slumped by INR 2,000/MT (USD 32/MT).
Industry experts fear falling Scrap prices will severely impact Indian Sponge iron market, which is already going through a tough phase. Sponge iron manufacturers mentioned that there is no scope of price correction looking the Iron ore and coal prices. Any price correction will lead to production cut significantly.
| Particulars | Grade/Delivery | Offers |
| Domestic Scrap | HMS 1&2, ex-Mumbai | INR 23,000/MT |
| Imported Scrap | HMS 1&2, CIF Mumbai | USD 320/MT |
| Sponge Iron | FeM 78, Delivered Mumbai | INR 21,500/MT |
Industry experts anticipate Scrap imports in FY15 to rise by 25% to 5.5-6 MnT against 4.5 MnT in FY14.
Leave a Reply