India’s bulk ferrous scrap imports hit another high at 443,953 tonnes till 25 November, 2022. The volumes increased by 23% m-o-m compared to 336,644 t in October 2022. A spike in imports was caused by lower bulk scrap prices in relation to container material and a shortage of scrap in the local market. The major exporter was the UK in November.
Increasing preference for bulk vessels among Indian buyers over containers boosted scrap imports in the last three months. Chennai, a major auto hub, remained a prominent destination for bulk scrap vessels in India, followed by Kandla.
Overview of suppliers market
- Major exporting countries: A total of 443,953 t had been reserved by suppliers till 25 November. Major suppliers were the UK (194,805 t), followed by the US at (160,324 t). Denmark, the Netherlands and Venezuela supplied in small quantities.
- Loading port: The busiest and most prominent scrap loading port in the UK was Liverpool. The port shipped around 84,923 t to India till 25 November. Furthermore, Los Angeles was the busiest and most visible scrap loading port in the United States.
Buyers’ market overview
- Landing port: A total bulk volume of 443,953 tonnes (t) was booked till 25 November, in which the highest quantity of 256,320 t was to land at Kandla, followed by 134,875 t moving to Chennai Port and the balance headed for Haldia (22,758 t) and Vizag (30,000 t).
- Major importing ports: India’s prominent bulk scrap buyer was Chennai, located in the southern region. The mills there were active in booking bulk cargo. Chennai is the major supplying market in the southern region. Units here mainly follow the secondary steel-making route, using scrap and sponge iron as basic raw materials.
It has been observed that recycling units play a vital role in this part of the country, and their capacities are expanding to feed end-user segments. Chennai also accounts for 60% of the country’s automotive sector and has the biggest share with 35% of revenues.
Furthermore, another prominent bulk scrap destination was Kandla in western India, which also sourcing good quality scrap for automotive production.
- IF mills curtail production: Domestic secondary mills have curtailed production and are running tentatively at 50-60% production on bearish finished steel demand in specific regions in western and southern market. Low demand for semi-finished steel and finished products put downward pressure on steel production. If demand for finished steel fails to improve significantly in the short term, declining prices will put huge pressure on both production and trade, according to sources informed.
Imported scrap is more cost-competitive: The landing cost of imported ferrous scrap is lower than that of domestic material. The current landed cost of bulk imports of US HMS hovered at INR 36,000/t ($440/t) in October versus the domestic material’s INR 38,800/t ($475/t) DAP Mumbai.
With the delta between imported and domestic having widened, traders are finding it advantageous to take positions on the former, which will be delivered a couple of months later. An additional bonus for traders is that container freight rates are still high, compared to bulk, allowing the latter to be more economical.
Outlook
The domestic Indian market seems to be subdued and the capacity utilisation ratio has been adjusted as per market dynamics. Thus, overall factors may lead to minor dips in scrap prices amid limited consumption along with substantial stocks on the western coast which were booked by major secondary mills.
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