Imported scrap prices in India have gradually increased during the past week, while secondary steel mill and electric arc furnaces have made cautious bookings of the limited supply options of ex-UK and ex-US shredded scrap, SteelOrbis has learned on Wednesday, June 3.
According to traders, while secondary steel mills are getting ready to resume operations as “unlock 1.0” was announced during the past week by the government, scrap trade volumes have remained limited.
A bulk cargo of ex-US scrap, including 20,000 mt of shredded scrap and 10,000 mt of HMS I/II 80:20, was purchased at the average price of $280/mt CFR. A possible further price increase in the coming one-to-two weeks has pushed customers to conclude a deal at a higher price level. Last week, customers were assessing the workable levels for bulk shredded scrap at $270-275/mt CFR.
Trades for imported scrap in containers have also been done at higher levels. The sources said that ex-UK shredded scrap deals were concluded at the marginally higher price of $282-287/mt CFR Nhava Seva port in the west compared to $278-280/mt CFR in the previous week. Two central India-based secondary steel mills have purchased ex-UK shredded scrap as a consortium for August shipment at $287/mt CFR Kandla port, the sources said.
Sourcing ex-UK scrap at higher freight costs has been the only option for secondary steel mills, following the temporary ban on exports by the UAE. At the same time, secondary steel mills did not have the liquidity to restock raw materials aggressively and they were not sure how much their plant capacities could be utilized in view of the expected prolonged demand recession in the local market.
Secondary steel mills in the western region around the state of Maharashtra have stayed away from import contracts as it continued to be the biggest pandemic hot spot in the country and port operations particularly at Mumbai and Nhava Seva ports are still to normalize and have been hit by a continued shortage of manpower and logistic challenges.
Citing major reasons for the scrap import trade persisting in the doldrums despite the government pushing for a resumption of manufacturing, a Gujarat-based scrap trader said that about 100 containers of scrap were still stuck at the western ports of Kandla and Mundhra as of the end of May, resulting in huge losses for importing traders, as they would be unable to make demurrage payments even once the stuck cargoes were released.
According to sources at the Metal Recycling Association of India (MRAI), even to date an estimated 250,000 containers of ferrous and non-ferrous scrap are stuck at various ports across the country and traders are almost close to bankruptcy if per day charges are to be paid to container stations at ports.
The MRAI member pointed out that, despite mills trying to bring back plants into operation, there is no support for local scrap prices either, indicating a lack of liquidity. Local scrap prices have continued to slide with prices down, falling by INR 200/mt ($3/mt) to INR 21,100/mt ($280/mt) ex-stockyard at Mandi Govindgarh in northern India. Prices have softened INR 200/mt ($3/mt) to INR 19,800/mt ($263/mt) ex-stockyard at Alang in the west.
$1 = INR 75.40