Domestic scrap prices in India are rising. Prices of domestic HMS (80:20) scrap, for instance, showed a hike of up to INR 3,600/tonne (t) w-o-w, especially in Mandi Gobindgarh, in the first week of April (1-5 April). Similarly, HMS prices in the Chennai and Jalna markets also improved by INR 400/t to INR 800/t in the week under review.
Factors propelling the price increase
Shortage of scrap: A shortage of raw materials pushed up prices in the northern region in the first week of April 2024. Furthermore, demand also improved in these markets from April.
In anticipation of a sudden hike in prices in the north, some of the key markets elsewhere also increased their price levels.
Because of the domestic shortage, imported offers also rose, driven by short-term positive sentiments following the fiscal year-end in March.
A scrap supplier informed they are holding on to material as trade-level prices are rising and inquiries from the mills’ side are quite good as the market has been seeing improved demand in semis and finished steel since early April.
Raw material price impact: Because of the improved demand for finished steel, billet prices in the Indian market rose by INR 1,500/t-3,000/t. The past two weeks have seen increased restocking activity for raw materials and finished steel.
Rebar prices have jumped by INR 1,000-3,400/t ($12-42/t) within a week (1 April to 5 April). Healthy price hikes of around INR 3,200-3,400/t were observed in the Raipur and Mandi steel markets amid active trades.
Mills attribute the ongoing price hike to the subdued market conditions from mid-January to March. “Now, buyers are re-entering the market for restocking, prompted by the recent price improvements in April,” a source informed BigMint.
“Starting mid-January, buyers have shown a preference for domestic scrap over imported due to the former’s price viability. This shift has resulted in a decrease in the imported scrap volume in the pipeline from January to March, as evidenced by lower arrival numbers in March 2024,” a mill source informed BigMint.
As per BigMint data, imported scrap arrival in March 2024 was lower by 34% to 0.55 mnt, compared to 8.3 mnt in February 2024.
Outlook
The recent price hike may be the impact of the positive sentiments in the market, especially for finished steel. Thus, these may be temporary.
