Import scrap prices in India have remained stable over the past week, but trade activity has fizzled out following the local currency touching yet another historical low against the US dollar, undermining the buoyant mood from gains seen in the long steel product market, SteelOrbis learned from trade and industry circles on Wednesday, December 10.
Sources said that ex-UK/Europe containerized shredded scrap offers have remained stable at $350-352/mt CFR Nhava Sheva port in the west, but even the levels seen in deals a week ago at $347-348/mt CFR have become unworkable for most buyers. Offers for ex-UK HMS I/II (80:20) are also reported unchanged, at $310-315/mt CFR.
However, according to the sources, even though secondary mills were seeing improvements in volumes and sales prices of rebar across major trading hubs, confidence in restocking imported raw materials has been hit by the Indian rupee depreciating to another historical low of INR 90.20 to the US dollar, increasing the landed price of imports in addition to the higher currency risks.
Foreign exchange dealers are predicting the rupee will fall further with a target of INR 95.00 per US dollar in the medium term, so importers have been averse to concluding deals with higher risks, the sources said.
“Currency volatility has halted all import activity. It is too risky,” a Mumbai-based ferrous and non-ferrous scrap trader said.
“Like in the case of most imported commodities, the rupee’s depreciation has hit scrap imports, negating any benefit of the recently improved realizations from long product sales. We expect a prolonged lull in imports as the local currency will remain fundamentally weak,” he added.
