India’s imported scrap market subdued on bid-offer disparities

Indian imported scrap market observed limited trade this week. Indian buyers opted to wait and watch market behaviours. The global price downtrend slowed down market activities, making market participants hope for a further price correction. However, a few deals were heard to have been concluded.

• Around 1,000 t of US-origin shredded scrap in containers have been booked at $545/t CFR NHSV basis.
• Few deals for West Africa HMS (80:20) were heard at $460/t CFR NHSV.
• UK-origin shredded offers are being quoted at around $555-560/t CFR levels, down by $5-10/t levels w-o-w.

Why have market sentiments remained bearish?

• Suppliers getting better prices in neighbouring markets: South Asian scrap suppliers have shown more interest in neighbouring country like Pakistan and Bangladesh. SteelMint’s assessment for shredded scrap stands at $562/t, CFR Pakistan. On the other hand, Indian buyers were quiet for the last few weeks, owing to the celebration of Diwali festival. However, post the holidays suppliers received fewer inquiries from Indian buyers due to drop in domestic prices.
• Lower bids from Indian steel mills: Meanwhile, another major factor that led to the slow market is the disparity in bids and offers. For instance, for shredded, bids are lower by $5-10/t against current offers.
• Mills prefer domestic substitutes: Indian steel mills have opted for other domestic substitutes like sponge iron, over the costlier imported scrap. Buyers continue to hold the bookings. Domestic scrap prices remain supported due to the improvement in substitute (sponge iron) prices, which pushed up prices of semi-finished steel across locations. On the other hand, a few other markets either saw prices tumbling on usual buying appetite. Prices in the short term may witness minor changes, trader sources reported. SteelMint’s assessment for HMS (80:20) was recorded at INR 37,000/t ($498/t) DAP Mumbai, while prices for Jalna are at INR 36,100/t DAP ($485/t), stable w-o-w.
• Volatility in domestic steel prices: IF-route re-bar market moves southwards towards weekend. Lack of demand for rebar and weak sentiments in the market have put brakes on spot trading activity. Persistent decline in prices turned traders cautious, resulting in delay in procurements, sources informed. IF-grade rebar prices remained under pressure, dropping INR 1,300/t to INR 49,900/t exw-Mumbai. 

Outlook: With recent correction in Turkey’s imported scrap prices, imported scrap offers to India may also see some correction. However, considering limited generation amid winters, sharp correction is less expected.