Imported scrap prices in India have continued to skyrocket during the past week due to the sustained bull run in the international market, but average tonnage per trade fell sharply amid buyers’ lack of muscle to commit large funds to conclude bookings and also amid hopes that a price correction will set in sooner rather than later.
Market sources said that shredded containerized scrap prices have reached $458-462/mt CFR Nhava Sheva port in the west, compared to deals concluded at around $425-430/mt CFR in the earlier week, with widespread speculative talk in the market of prices touching the $500/mt mark in the New Year even as a large number of buyers are hoping for a correction as prices have moved up too fast in a very narrow timeframe.
They said that, while offers for ex-UK shredded scrap remained sparse, only one stray deal for a marginal tonnage has been reported, at a price of around $462/mt CFR Mumbai.
“Buyers have sharply reduced booking tonnages, pressured by required liquidity and expectations of a correction. But reports we receive indicate that the US scrap market is in a huge supply-demand mismatch and will continue to register gains through January. Talks of the Indian imported scrap price at $500/mt do not seem too speculative or crazy now,” a member of the Metal Recycling Association of India (MRAI) said.
“Our assessment is that, with China liberalizing scrap imports effective January 1, 2021, the demand-supply mismatch will get further aggravated and higher Chinese buying will fuel international prices. Domestic scrap generation is also not growing with fewer vessel arrivals at the western Indian shipbreaking yard at Alang. Rebar prices of domestic secondary mills are rising, but not at the pace of imported scrap and the viability of electric arc furnaces is at serious risk,” he added.
Sources said that a Maharashtra-based secondary steel mill concluded a trade for 8,000 mt of ex-US containerized shredded scrap at around $458-460/mt CFR Nhava Sheva, while a Mumbai-based trader reported a deal for 5,000 mt at a price of around $460-462/mt CFR for April delivery.
Another secondary mill based in Raipur in central India reported a deal for 10,000 mt of ex-US shredded scrap at a price of around $458/mt CFR, the sources added.
According to market participants, sourcing of scrap from local markets around Mandi Govindgarh in north has continued to be a challenge with blockades being put up across the region by protesting farmers and strong speculation driving prices amid daily volatility.
They said that on average the scrap price at Mandi has increased INR 1,500/mt ($20/mt) to INR 35,500/mt ($484/mt) ex-stockyard, with some buyers reporting an additional premium of at least INR 1,000/mt ($14/mt). The price at Alang in the west was up INR 1,000/mt ($14/mt) at INR 31,300/mt ($426/mt) ex-stockyard.
$1 = INR 73.40