India’s import scrap prices have remained stable over the past week and trade activity has been nearly absent as secondary mills have been reducing scrap usage and increasing use of cheaper sponge iron to rein in costs at a time of higher pressures on margins from declining long product prices, SteelOrbis learned from trade and industry circles on Wednesday, July 16.
Ex-UK/Europe containerised shredded scrap offer prices are quoted unchanged in the range of $360-365/mt CFR Nhava Sheva port in the west and ex-UK HMS I/II (80:20) prices are also stable, at $335-340/mt CFR.
But, according to the sources, as per industry estimates, usage of sponge iron by secondary mills had increased by 50-60 percent over the last month, with a commensurate decline in use of scrap as feedstock, as the mills were attempting to protect margins by reining in input costs as long product steel prices were edging lower week on week.
The higher usage of sponge iron and domestic scrap by secondary mills was triggered by the steady fall in prices of both these preferred choices of feedstock. The sponge iron price is down INR 300/mt ($3/mt) over the past week to INR 28,700/mt ($334/mt) ex-Mandi Govindgarh in the north, while bulk scrap has fallen by INR 600/mt ($6/mt) to INR 32,100/mt ($373/mt) ex-Mandi Govindgarh.
“Imported scrap prices are being kept steady on global cues. But local mills are becoming much more cost-conscious as finished steel prices are on a prolonged downturn and margins are under pressure. All mills are increasingly looking at cheaper domestic feedstock alternatives to keep input costs in check. We do not see interest in imports improving until such time as finished steel prices improve too. We, traders, are also not making any import bookings either to avoid inventory build-up and locking up working capital,” a Mumbai-based trader said.
$1 = INR 85.98