Indian import scrap deals have dampened in volume for the last week as a result of local demonetization policies that still had some market buyers encounter money shortages. Local scrap market participants with limited international financing options and limited domestic liquidity had to slow market participation since November 9 when the Indian government banned banknotes with face values of Rs500 ($7) and Rs1000 ($15). The law was implemented to combat corruption and money laundering in the country.
This has forced some domestic manufacturing plants and scrap yards to shut down or slow production. Additionally, the currency problem is still delaying the movement of port arrivals to final destinations. The damage to the domestic market has put downward pressure on all steel related materials from scrap and DRI to finished steel products.
The lack of liquidity in the domestic market has removed the involvement by some scrap buying participants resulting in fewer scrap bids to the international market. Along with the softening of the Chinese steel market and a quiet week of Turkish import scrap bids, this dampened demand from India moved deals lower than the offer price of $280/mt CFR Nhava Sheva.
A US shredded containerized deal from the East coast was heard late last week at $265-270/mt CFR Nhava Sheva. A source close to SteelOrbis commented, “They need to continue scrap buys to stay competitive, large firms are not affected by the banknote change, and this buy is for delivery in late December. The effect on the smaller notes probably affected scrap yards and decreased domestic scrap intake, therefore, making imports necessary.”
$1= 68.23 INR/Rs