Imported scrap prices in India have started to increase over the past week, but this has not deterred local secondary steel mills from increasing bookings and restocking to seize dual advantages of the recent lowering of customs duty and the appreciating local currency, SteelOrbis has learned from trade and industry circles.
However, the sources said that, despite the rebound in import activity seen recently, a negative outlook on trading remains on the horizon in the form of rebar prices not being at high levels and the amount of near-term upside potential of import scrap prices, considering active resumption of buying in bellwether markets like Turkey.
“Import sentiments and prices are definitely reviving. Buying in Turkey is strong. Chinese buying too is expected to be aggressive once business activity resumes after the holidays. These will significantly boost the scrap import market,” a member of the Metal Recycling Association of India (MRAI) said.
“However, it is to be seen how much of a price upside local secondary mills can accept, considering strong pricing pressures in the local rebar market. The nil rate of import duty, the Indian rupee appreciating strongly above the INR 73.00 to the US dollar mark is still giving importers some advantage at the current higher imported scrap prices, but will not do so if the latter moves up too strongly as seen last year,” he added.
Market sources said imported scrap deals were heard in the market at levels of around $410-415/mt CFR Nhava Sheva port in the west for ex-US containerized shredded scrap, which towards the close of the week moved up to $415-420/mt CFR. This compares to $405-408/mt CFR a week ago, but with almost zero trading activity.
The sources said that a Mumbai-based trader acting on behalf of two central India-based secondary steel mills has concluded a trade for ex-US shredded scrap at around $415/mt CFR.
A Gujarat-based steel mill reported a trade of ex-UK containerized shredded scrap at the highest price reported during the week of $420/mt CFR, the sources said.
A Raipur-based secondary steel mill in central India has reportedly concluded a contract for ex-US shredded scrap at a price of around $415-420/mt CFR, the sources added.
Local scrap prices have continued to maintain higher levels, with at least two traders saying that local scrap dealers are yet to adjust their prices after the reduction of import duty to nil and that the price differential between imported and local scrap is too wide and most buyers are not opting for local sourcing until prices are adjusted lower. However, another trader said that local dealers would prefer to wait more weeks and see the current upside movement of imported scrap and the trends in the currency exchange market, before taking any call on local pricing. Local scrap prices have remained at INR 38,000/mt ($523) ex-stockyard at Mandi Govindgarh in the north and also unchanged at INR 32,500 ($447/mt) ex-stockyard at Alang in the west.
$1 = INR 72.70