India: Alang ship-breaking scrap extends losses as weak steel market weighs on sentiment

• Declining finished steel prices continue to pressure ship-breaking scrap demand
• Scrap shortage supports Mandi Gobindgarh market despite cautious buying

Ship-breaking melting scrap prices in Alang, Gujarat, declined by INR 300/t ($3/t) day-on-day on 3 August, with HMS (80:20) assessed at INR 32,500/t ($342/t) ex-yard. The decline reflects weaker buying interest amid subdued downstream steel demand and persistent pressure on finished steel prices. Although monsoon-related disruptions have constrained ship-breaking operations and limited processed scrap availability, the tight supply has not been sufficient to offset the prevailing bearish sentiment.

Gujarat market update

The broader Gujarat steel market remained under pressure, limiting support for scrap prices. In Bhavnagar, billet prices were unchanged day-on-day at INR 40,500/t DAP, while Ahmedabad rebar prices fell by INR 200/t to INR 45,500/t ex-works. The weakness in finished and semi-finished steel continued to influence procurement decisions, with buyers restricting purchases to immediate requirements amid uncertain demand.

Mandi market update

In contrast, market sentiment in Mandi Gobindgarh remained relatively resilient. Billet prices increased by INR 200/t day-on-day to INR 42,300/t, while rebar prices gained INR 100/t to INR 46,900/t. HMS (80:20) melting scrap prices held steady at INR 34,900/t DAP, supported by limited scrap arrivals and tight local availability.

The supply constraints prompted induction furnaces to maintain a higher dependence on sponge iron, with the prevailing charge mix estimated at around 70% scrap and 30% sponge iron. However, market participants noted that procurement remained largely need-based, indicating that higher input costs have yet to translate into stronger underlying steel demand.

Outlook

The near-term outlook for the domestic scrap market remains mixed. While supply constraints are expected to provide a floor to scrap prices in key consuming regions, weak finished steel demand and cautious mill procurement are likely to cap any significant upside. Regional price trends will continue to depend on downstream steel demand, scrap availability, and production economics.

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