Import scrap prices in India have increased in the past week, with sellers submitting higher offers but local buyers led by secondary mills have exited the market, halting the activity seen in the earlier week, caught unawares and nervous over the local currency hitting yet another historical low and forecast to fall further against the US dollar, SteelOrbis learned from trade and industry circles on Thursday, January 2.
Ex-UK/Europe containerized shredded scrap prices are quoted in the range of $388-390/mt CFR Nhava Sheva port, versus $385-388/mt CFR last week, and a few offers have also been reported as high as $400/mt CFR.
HMS (80:20) scrap offers of UK origin have increased by $5/mt to the range of $370-375/mt CFR, the sources said, while some West Africa origin offers are at $365/mt CFR.
Sources said that the revived buying activity seen in the earlier week came to a sudden halt with secondary mills retreating and declining to conclude deals at higher levels as the sharply depreciating Indian rupee significantly pushed up the landed cost of the raw material.
The Indian rupee plunged to a historical low of INR 85.67 to the US dollar but recovered to $85.50 subsequently, though still remaining at around an all-time low against the greenback. Forex dealers have forecast that the local currency can touch the INR 86.00 mark against the US dollar over the next few months.
“The currency depreciation, coupled with higher offers, is making imported raw material unviable for most secondary mills. The high volatility of the rupee has also increased the currency hedging costs of importers and mills are unwilling to take the additional burden and hence have retreated from the market,” a Mumbai-based ferrous and non-ferrous scrap dealer said.