Despite the reduction of the customs duty on scrap to nil, India’s scrap import activity has become completely silent, as secondary steel mills are nervous over falling rebar prices and negative sentiment has prevailed in the import scrap segment, SteelOrbis has learnt from trade and industry circles on Wednesday, February 10.
The sources said that indications of a bull run in local finished steel prices reversing and rebar prices particularly softening rapidly opened up fresh threats of fiscal stress for secondary steel mills and hence they have been staying away from restocking of imported raw material except in the rare emergency of a drawdown in stocks.
At the same time, local importers think that the market is yet to hit a bottom and with the expected downslide to gain momentum, and re-entering the market could only be considered once prices have settled definitively below the $400/mt CFR mark in the near term. These thoughts, however, are not supported by the situation in the global market, where the major sellers from the US and other regions have been insisting on a rebound.
Market sources said that, while no significant trade has been reported amid completely silent conditions, ex-US containerized shredded scrap prices have been at $405-408/mt CFR Nhava Sheva port in the west, compared to $408-412/mt CFR a week ago.
“The local import market is on mute. Everyone is in wait-and-watch mode. Secondary steel mills are worried over their revenue generation in the wake of the fall in rebar prices. All eyes are on how a new trend emerges after the Chinese New Year holiday and the level of buying activity in bellwether markets like Turkey, which would determine the next scrap price,” a member of the Metal Recycling Association of India (MRAI) said.
The lack of any buying activity has also led to stagnation in the local scrap market where prices have remained at INR 38,000/mt ($521) ex-stockyard at Mandi Govindgarh in the north and are also unchanged at INR 32,500 ($445/mt) ex-stockyard at Alang in the west.
$1 = INR 73.00