Imported Scrap offers from Middle East goes up marginally.
High Sponge iron and Pig iron prices in domestic market followed by strengthening INR have prompted induction furnaces to go for imported Scrap.
As per importers, imported Scrap offers for HMS 1&2 from Middle East have moved up by USD 3-4/MT for container purchase, to USD 400/MT CFR Mumbai. Middle East prices are comparatively higher than cargoes coming from Europe or US due to prompt delivery. Shredded Scrap from Europe & US is being offered at USD 410-415/MT CFR Mumbai.
Importer based in Mumbai shared that few trades of HMS 1&2 from Middle East have even been settled at USD 400/MT CFR Mumbai to a induction furnace based near Pune.
Smelters based in Punjab & Maharashtra, India’s largest Scrap importing states, believe that demand for finished steel is still subdued and this may restrict any further upside in Scrap prices. They also mentioned that imported Scrap offers to India are already high looking at global prices.
On the contrary, mining ban in Odisha will keep Iron ore and Pellet prices high for a short period until aggressive imports of Iron ore or Pellet begins.
Sponge manufacturers are likely to feel the pressure of high raw material cost and lower realizations. Eventually, they have to either cut down their production or operate at a thin margins. Industry veterans believe that Sponge manufacturers will prefer to cut down their production rather than operating at a thin margins.
Sponge Iron Manufacturers have low Iron Ore Stock
Speaking to some of the Sponge iron manufacturers based in eastern India, SteelMint assessed that they have low Iron ore inventory. Most of them preferred not to purchase Iron ore at high prices.
Rising Power Prices will put Pressure on Sponge Manufacturers
Power prices are expected to rise in Chhattisgarh, Andhra Pradesh & West Bengal. This will further build pressure on Sponge iron manufacturers. In this situation, Scrap imports will be more viable option for induction furnaces located in eastern India.
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